October 30, 2024

industry super

Self- funded retirees to pay more for aged care

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Self-funded retirees and many part pensioners will pay more for their aged care under the federal government’s reform package, which has been supported by the opposition.

The government says is the biggest reform package in 30 years and will shift the system further towards home care.

The package includes a “no worse off” principle. The treatment of the family home won’t change.

The government has pledged $4.3 billion for Support at Home, starting on July 1 next year.

Under the new arrangements, the government will pay 100 per cent of clinical care services, with recipients contributing to services such as help with showering and taking medications, as well as to everyday living costs such as shopping and meal preparation.

How much a person contributes will be based on the age pension means test and their personal circumstances, including their level of need and their income and assets.

A lifetime contribution cap will apply across the aged care system. This will mean no one will contribute more than

$130,000 to their non-clinical care costs, regardless of their means or the length of their care.

For every dollar full pensioners contribute, the government will contribute on average $12.90. For part pensioners the government will contribute on average $6.10 for every dollar. For self-funded retirees the government will contribute $1.60.

Industry super funds outperform for-profit funds in 2023

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The industry watchdog, Australian Prudential Regulation Authority (APRA), has savaged the big for-profit funds in its super performance test.

Not-for-profit industry super funds, including HESTA, dominate the top 10 performing super funds for 2022–23, according to SuperRatings.

“A rebounding share market has delivered Australia’s six best-performing funds double-digit returns in the past financial year, while the top 10 delivered an average return of 9.5 per cent,” reported the New Daily.

“That’s a sizeable turnaround from the 3.4 per cent loss reported a year ago as the share market suffered a COVID-19 hangover amid soaring inflation and the start of interest rate hikes.”

Meanwhile, APRA has released the results of the 2023 superannuation performance test.

The annual test is designed to improve outcomes for members by assessing long-term performance against benchmarks.

ACTU Assistant Secretary Joseph Mitchell said the results “once again illustrate the significant and persistent underperformance of for-profit super funds”.

“Ninety-eight per cent of products that failed the performance test were from a for-profit or non-industry fund,” he said.

“Industry super funds consistently perform better and are governed better.

“The banking royal commission showed working people are often sold into choice products by for-profit providers and it is important that they have a clear understanding of the performance of their retirement savings demonstrated through performance testing.

Australian women underpaid $1.3 billion in super

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A new report from Industry Super has revealed little-known law changes dating back to the 1990s that allowed employers to pay superannuation quarterly, instead of per pay cycle, caused systemic underpayments to women.

On average, women currently retire with around a third less in their super balance than men, which can be attributed to a range of factors including maternity leave, longer stints of part-time work and the gender pay gap.

Key findings of the report:

  • About one in five women did not receive the full amount of super owed to them in the 2019-2020 financial year;
  • One in four women aged 20-39 lost an average of $1110, while just under 40% of younger women earning less than $25,000 a year lost about $570;
  • About a quarter of women in female-dominated industries like aged care and personal services are underpaid by up to $40,000 over their working lives, equivalent to about 10% of savings; and
  • Increasing the frequency of super guarantee contributions would deliver an extra $8,000 at retirement to 4.2 million workers.

Organisations that choose to pay super quarterly can end up spending more over the longer term if contributions go missing, which also greatly impacts returns.

Female-dominated industries like childcare, aged care and nursing are some of the most likely to be underpaid.

The report warns even when super contributions appear on a payslip, it does not guarantee it has been paid. It argues paying contributions in line with pay cycles would make it easier for workers to track their payments, which should equal 10.5% of their salary, and at no additional cost to the federal government.

“Mandating the payment of super with wages would benefit women immediately,” the report states.

“This change could result in an additional $300 million in super contributions flowing to women over the next four years.”

View the full report from Industry Super here.

Are you worried you’re being underpaid super?

Get in touch OR join your union here.

Take control of your future – Aware Super are running webinars for you

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A complimentary education series for NSW Nurses & Midwives Association members.

Aware Super cares deeply about the financial health of all their members and understands that there are many challenges that people can face when it comes to money and retirement.

Whether you are just starting out in your career or nearing retirement, our webinars these webinars will arm you with the knowledge to make the most of your super. So, no matter what stage of life you’re at, Aware Super can help you discover new ways to make your super work harder.

Webinars

These 15-30 minute webinars are complimentary to members from Aware Super and will cover:

  • Beneficiaries & Estate Planning
  • Planning for Retirement
  • Invest Basics
  • Fundamentals of Super

When: A range of sessions will be held from Wednesday 23 November – Thursday 1 December 2022.

Find one that is right for you.

These Aware Super webinars are open to NSW Nurses & Midwives Association members and their guests and provide a highly interactive way to learn more about super and plan for your future.

To register visit click here

We hope you can join us to learn more about taking control of your financial well-being.

This article was sponsored by Aware Super

Personal advice requires the provider to act in the client’s best interests and take into account the client’s circumstances. These rules do not apply to general advice. This communication contains general advice only and no personal advice. We have not taken into consideration any of your objectives, financial situation or needs or any information we hold about you when providing this general advice. Further this communication does not contain, and should not be read as containing, any recommendations to you in relation to our product. Before taking any action, you should consider whether the general advice contained in this communication is appropriate to you having regard to your circumstances and needs and seek appropriate professional advice if you think you need it. Contact us to make an appointment to see one of our representatives. Before making a decision about Aware Super you should read our product disclosure statement and Target Market Determination (TMD) available at aware.com.au/PDS or call us and we’ll send you a copy. Issued by Aware Super Pty Ltd ABN 11 118 202 672, AFSL 293340, the trustee of Aware Super ABN 53 226 460 365. Financial planning services are provided by our wholly owned financial planning business Aware Financial Services Australia Limited, ABN 86 003 742 756, AFSL No. 238430. You should read their Financial Services Guide before making a decision.

Important super changes introduced

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Federal government changes to super that “staple” a fund member to a performing fund for their working life were introduced on 1 November.

The new super laws ensure that, unless you actively choose otherwise, your active super account or the first fund you joined when you started working will follow you throughout your working life, even if the fund is poor-performing.

This is what is known as “member stapling” in the legislation.

The goal is to avoid a person having more than one super fund and paying multiple fees, which would erode retirement savings unnecessarily.

If you do not provide your fund of choosing, it will be an employer’s responsibility to search and check with the ATO if their new employee has a “stapled” super fund and ensure that future SG contributions are paid into it.

Stapling does not apply to members working in the NSW Public Health System. Aware Super – a “top-performing” fund – is nominated as the default fund for employees under the First State Superannuation Act 1992 (NSW).

Aware Super recommends that if you change jobs:

  • check with your new employer’s payroll team and request a Superannuation Standard Choice form to provide them with your chosen super account details
  • research and review your superannuation fund’s performance. An underperforming fund can mean less for you in retirement, which could mean you’ll need to work longer.

For more information: Your super, your choice:

 

Retail funds escape scrutiny

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Industry super funds and unions fear millions of workers will be “stapled” to a dud fund.

The Morrison government’s latest superannuation law changes will require most superannuation products to meet an annual  performance test.

Those that fail will be required to inform members. Persistently underperforming products will be prevented from taking on new members.

However, not all funds will face the performance test, with industry funds subjected to higher scrutiny than bank-owned retail funds – at least in the initial stages.

The government claims it intends to extend the performance test to retail funds in the future.

But Industry Super Australia (ISA) Chief Executive, Bernie Dean, said more than $500 billion of members’ savings are shielded from performance tests – including products that were savaged during the banking royal commission.

“ISA will be pushing the government to ensure the funds they carved out – which are some of the worst in the system – are quickly included,” he added.

Australians need to engage with their super

ISA is also worried that workers will be permanently tied to underperforming funds.

In its superannuation law changes the government has sought to “staple” employees to a single fund, which would follow them from job to job.

From 1 November 2021, when an employee starts a new job but does not nominate a  super fund to receive contributions, their employer is required to make contributions to their existing super fund, if they have one.

The government says this will reduce the number of people with multiple accounts – each with a set of fees.

However, Dean says this means at least 2.6 million super fund accounts are locked in funds that could fail performance tests.

“ISA pushed for sensible amendments that would have mandated that Australians can only be stapled to funds that pass the performance test,” he says.

“Instead, the government has given poor super products a leg-up at the cost of the workers they are fleecing with their high fees and lousy performance.

“This means it is even more important that Australians engage with their super and find a high-quality fund with low fees and good returns.

“We will monitor the impact of the bill and may press future parliaments to mandate that Australians can only be stapled to the best performing funds and not the worst ones.”

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