Super news for September 2024

Self-funded retirees to pay more under proposed Aged Care reforms

Self-funded retirees will contribute more to their aged care needs – both at home and in residential care – under new aged care reforms announced by the Labor Government in response to recommendations by the Aged Care Taskforce.

The Government says the net impact of the changes is a $930 million spend over four years and a $12.6 billion save over the next 11 years.

Starting from 1 July 2025, the Hoteling Supplement – which funds the gap between the Basic Daily Fee for residential aged care and the actual cost of providing everyday living services in residential care – will be means tested.

Residents who have more than $238,000 in assets, more than $95,400 in income, or a combination of the two, will make additional contributions towards their everyday living costs.

The contribution will be calculated as 7.8% of assets over $238,000 or 50% of income over $95,400 (or a combination of both), up to a limit of the Hoteling Supplement ($12.55 per day, as at 20 September).

The Government has promised quicker access to the new Support at Home program and will target average wait times for services of three months from 1 July 2027.

Under the Support at Home program, there will be no personal contribution required for services in the clinical category (such as nursing and physiotherapy), however contributions will be required for services in the independence category (personal care) and everyday living services (such as domestic assistance and gardening). Independence service contributions will start at 5% for full pensioners ranging up to 50% for self-funded retirees, while contributions for services in the everyday living category will start at 17.5% for full pensioners, increasing to 80% for self-funded retirees.

Coalition amendment to paid parental leave rejected by industry  

The Government has introduced the Paid Parental Leave Amendment (Adding Superannuation for a More Secure Retirement) Bill 2024 into Parliament which will allow for the payment of super on Government-funded Paid Parental Leave.

Despite agreeing in principle to support this proposal, the Coalition is now seeking to amend the legislation to “introduce more flexibility”.

The Coalition is seeking amendments that would allow Australian parents eligible for government-funded paid parental leave to choose between receiving:

• Super contributions on government-funded paid parental leave, or
• An additional two weeks of government-funded paid parental leave, increasing leave to 26 weeks after 1 July 2025 and 28 weeks after 1 July 2026, or
• A one-off payment equal to the total value of the super entitlement for government-funded paid parental leave.

However, industry organisations like the Super Members Council (SMC) are urging the Coalition to reconsider.

“It undermines the policy intent to boost the retirement savings of Australian mums and to start to turn around the gender super gap – which has been widening for women in their 30s,” SMC chief executive officer Misha Schubert said.

“It sends a deeply concerning message to mums that they should sacrifice their future financial security to meet daily expenses…And it risks putting pressure on mums to raid their retirement savings or being forced to by coercively controlling partners.”

Super funds need to do more for millennials

Millennials might be the largest generation in the workforce but new research from the Australian Security and Investment Commission’s Moneysmart found that nearly half (48%) of surveyed millennials admit they are not knowledgeable about maximising their super.

Concerned about the lack of engagement in super by this age group, ASIC convened a roundtable of financial professionals working with millennials. All agreed the “current language and approach to superannuation is outdated and disengaging for millennials.”

Millennials are less engaged with their super compared to previous generations, and panellists at the roundtable believe super funds may be failing to meet the expectations of their millennial members, especially when it comes to transparency.

“I question whether super fund members receive the same level of clarity about what is happening with their super compared to the minute-by-minute access you get from other banking and financial services apps,” ASIC commissioner Simone Constant said.

The panellists discussed the importance of making tools, calculators and goal-setting information more available and accessible to millennials.

“As an industry we could do a much better job of making super tangible for people. We need to show people where their money is invested. Make it less about ‘superannuation’, more about tangible investments,” award-winning financial adviser at APT Wealth and roundtable attendee Andrew Dunbar suggested.

Super CEOs urged to mind their conduct in private markets

Meanwhile, chief executive officers of major super funds were reminded of their conduct obligations and urged to foster market integrity when investing in private markets, at a separate roundtable series hosted by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC)

“The CEOs agreed that as investment opportunities in private markets continue to open, it is essential that funds have prudent valuation practices and investment governance,” APRA and ASIC said in notes released following two roundtables.

Given that private markets are not naturally as transparent as public markets, trustees were urged to focus on providing transparency.

“Trustees using external fund managers need to ensure they are holding their providers to account, and clearly understand what information is held and who acts on their behalf while maintaining robust controls,” the regulators said.

Unpaid super costs Australians over $5 billion a year

New analysis by the Superannuation Members Council has found that 2.8 million Australians miss out on $5.1 billion in legal super entitlements (2021–22) annually.

Over nine years, Australians have missed out on a total $41.6 billion in unpaid super, with the average affected worker missing out on $1,800 in super in a year.

The SMC says this could mean more than $30,000 less in retirement savings for a typical worker at retirement.

“Unpaid super locks too many Australians out of the full transformative benefits of the retirement system and leaves people poorer when they retire. A unified push is needed to stamp it out,” SMC chief executive officer Misha Schubert said.

Payday super reforms are due to be enacted in 2026, which should come some way to reducing unpaid super, however details of the legislation are not yet clear and have not yet been introduced to parliament.

“Legislation to pay super on payday, combined with a stronger ATO enforcement regime and better support for workers to claim their super after insolvencies, is crucial to ensure millions of Australians who are currently being short-changed are paid their super on time and in full,” Schubert said

Super assets grow by 9% in 2023-24

The superannuation industry grew by 9.1% in the2024 financial year as total super assets increased to $3.92 trillion, according to the latest data from APRA.

Total APRA-regulated super funds still account for the largest proportion of super assets at 69% or $2.7 trillion, while self-managed super fund (SMSF) assets accounted for 25% of all assets.

APRA-regulated super funds assets increased by 10% over the 12 months while SMSF assets grew by 7.5%.

Total super contributions rose by 11.2% to $183.9 billion while total benefit payments increased by 15.3% to $117.7 billion over the financial year.