Luke Marshall
Gen X is feeling the pressure, with many people caught in the middle, taking care of both their aging parents and their own kids, while having been completely left out of recent superannuation regulations.
Luke Marshall, Senior Partner at KDM Financial and Estate Planning, said not only are there no real initiatives aimed at Gen X, those that have been implemented at all Australians are a slap straight back at the Xers.
“Firstly, there is the Downsizer Contribution and Work Test that has allowed Baby Boomers to invest into their superannuation accounts reducing tax revenue and, with some good planning, increasing older Australian’s access to the Age Pension.”
“This is great news for Baby Boomers, but someone has to pick up the bill and inevitably we are finding it ends up being their children, the Gen Xers.”
Mr Marshall pointed to another example, the First Home Super Saver Scheme.
“This scheme is a great opportunity to help younger Australians enter the housing market. However, this will result in less tax revenue for the government which therefore needs to be drawn from other areas in the budget. We are concerned it will be areas that benefit Gen X.”
Another recent initiative is the Opt-in Insurance for members under the age of 25, which also requires super funds to cancel any current default insurance policies for members under 25.
“Again, this is a great move for younger members who need help building up their low balances. However, this will likely result in increased premiums for everyone else.
“Insurance providers need young, healthy members in their premium pool, to offset the cost of insuring older, and presumably less healthy members. This is known as risk pooling and is fundamental to the feasibility of the insurance industry.”
Mr Marshall suggests Gen X monitor their superannuation fees and shop around. More funds being introduced over the past two decades has resulted in increased competition, regulation, technology and improved reporting across the industry, plus more competitive fees.
“Very recently, regulatory changes and increased compliance costs, in the wake of the Hayne Royal Commission, has actually reversed this trend. Therefore, it’s important to know what you’re paying and compare your fund with the rest of the market.”
He advised that those looking at more competitive deals make use of the Government’s YourSuper comparison tool, which is an easy way for members to compare the quality of their super fund.
“Do bear in mind the site can only compare MySuper products. Furthermore, once you find out you’re in a poor quality fund, it can be hard to know what to do about it.
“We can help clients change to a more suitable super fund and also assist with finding appropriate life insurance.”