“LEARN FROM THOSE OLDER THAN YOU AND PLAN THE LIFESTYLE YOU WANT”

“LEARN FROM THOSE OLDER THAN YOU AND PLAN THE LIFESTYLE YOU WANT”

As we wait for the Retirement Income Review report to be released, we thought we’d ask one of our very own, George Georgiou, how he feels personally about getting closer to retirement and find out just how good the superannuation system, in particular, has worked for him.

George, please tell us a bit about yourself.  What are your likes, dislikes?

I’m in my 60s and married with 3 adult daughters. I enjoy spending time with family and watching my beloved Tigers. What I dislike is spending time commuting and seeing the Tigers lose!

What’s your dream retirement?

It’s important to me to retire with good health, and not ‘work myself to death’, so whilst I am feeling ok and making a contribution I will keep working. The move to working from home has helped me a lot, not having to travel for 3 hours a day. This has been a factor in my thinking about transitioning to retirement in a stage approach. Once I retire, I think there will be some travel, local and overseas, but spending time with family and friends will be important to me.

Are you likely to live out your dream retirement?

I hope so – the cost of living is going up all the time, so I keep trying to put money into areas that will save me money once I am retired – home renovations are top of the list.

What will be most important to you in retirement?

The most important things for me will be good health – to be able to do the things I want to do; no pandemics to interfere with my holiday plans; and an income – that supports the lifestyle I want to have.

Have you planned for your retirement and if so, how?

I am putting some extra dollars into super each pay day to help boost the final balance. I am making sure that I don’t take have any debts when I get to retirement age. Also, we are looking to manage our lifestyle to spend less each week.

What has the current pandemic highlighted for you and does this affect your plans?

The pandemic has made me realise how much time was lost travelling into the office every day. Working from home will now be a constant part of my remaining work life. I feel that I now have the ability to work longer than might have been the case if I had to continue to commute every day to work.

How do you feel about getting closer to retirement?

I am reasonably confident as my super balance has not been greatly impacted by the pandemic – a zero return for the last year is about all I could have expected. Using the calculator on my fund’s website says I need to keep contributing a little extra regularly to my super to ensure my retirement income meets my lifestyle.

What has your experience of the superannuation system been like?

Super is a very major part of my retirement planning. I only moved from a retail fund to an industry fund 5 years ago and, looking back, I wish I had moved earlier. The clarity of the reporting from the industry fund has made it much easier for me to understand where my money is invested and the returns it is generating – this was not there 5 to 10 years ago.

I feel that having the flexibility to choose where my money is invested is a positive feature, especially if you believe that you would prefer your savings to be invested in the industries you support rather than those selected by your fund’s investment committee.

As you get closer to retirement, what message do you have for people younger than you?

I encourage everyone to look at the lifestyle of your seniors or parents, and ask if they have the lifestyle that you would like to have when you reach their age.

Consider how they have achieved that lifestyle, positive or negative, and ask yourself what lessons you can learn from their position. Then, set the plans in place to achieve your preferred retirement lifestyle.

By George Georgiou (Principal Consultant)

YOUR FUTURE, YOUR SUPER

YOUR FUTURE, YOUR SUPER

As part of the Federal Budget, the Government’s Your Future, Your Super reforms have been announced. Provided the measures are passed by Parliament, by 1 July next year, the following changes will take effect.

Stapling Employees to a Super Fund for Life

  • Employees will keep their super fund when they change jobs, and thus stop the creation of unintended multiple super accounts and the erosion of super balances.
  • Employers will pay super to an employee’s existing super fund unless the employee selects an alternative fund. Employers will obtain information about an employee’s existing super fund from the ATO by logging onto ATO online services.
  • If an employee does not have an existing super account and does not make a decision regarding a fund, the employer will pay the employee’s superannuation into their nominated default fund.

YourSuper Comparison Tool

A new, interactive, online comparison tool will help members decide which super product best meets their needs. The YourSuper tool will:

  • Provide a table of simple super products (MySuper) ranked by fees and investment returns.
  • Link to super fund websites where members can choose a MySuper product.
  • Show a member’s current super accounts and prompt them to consider consolidating if they have more than one.

Annual Super Fund Performance Test

  • MySuper products will be subject to an annual performance test.
  • If a fund is determined to be underperforming, it will need to tell its members of its underperformance by 1 October 2021.
  • When funds communicate their underperformance to members, they will also be required to provide information about the YourSuper comparison tool.
  • Underperforming funds will be listed as underperforming on the YourSuper comparison tool until their performance improves.
  • Funds that fail two consecutive annual underperformance tests will not be permitted to accept new members. These funds will not be able to re-open to new members unless their performance improves.
  • By 1 July 2022, annual performance tests will be extended to other superannuation products.

New Best Financial Interests Test for Trustees

  • Trustees will be required to comply with a new duty to act in the best financial interests of members.
  • Trustees must demonstrate that there was a reasonable basis to support their actions being consistent with members’ best financial interests.
  • Trustees will provide members with key information regarding how they manage and spend their money in advance of Annual Members’ Meetings.

The Federal Budget did not announce any change to early release arrangements, freezing the SG, or launching an insurance review.

IQ have been full steam ahead in working through the many changes that are happening within the superannuation industry and our clients are well and truly supported by our consultants as we work through the challenges at play whilst in the midst of a global pandemic. Australians deserve a top-class retirement income system and, whilst some changes on the horizon require careful consideration and negotiation in order to ensure better outcomes for all, we are heading in the right direction.

Matt Giuliano (Managing Principal)