Hello fellow super enthusiasts!

As usual, the rumor, innuendo, assumptions and intrigue were flowing (it sounds like I am talking about a Stephen King book right?) before the release of the Federal Budget last night. Whilst I was interested to see whether there would be any special tax considerations for clog collectors, I was also waiting to see what would happen in regards to the tax rate applied to concessional contributions of high-income earners. At present, the contribution tax rate is a flat 15%, however, prior to the Budget being handed down, numerous articles were reporting that the Government had announced this rate would increase to 30% for those earning over $300k (about the top 1% of income-earners). That is precisely what happened.  

Now, whilst improving equity in the retirement system is a topic close to my heart and therefore I agree with the additional contributions tax for the big hitters, I am also keen to ensure that the super system continues to strive towards efficiency and a better member experience. Which brings me to my next point; that any reforms made must, from an administrative perspective, be cost effective and efficient. Unlike that nasty little tax we all know as the ‘surcharge’ (I wish to apologise to those who find the use of this word offensive!). Although we haven’t seen much detail regarding how the 30% tax on concessional contributions will work, I hate to think that we, as an industry, may end up with a ‘surcharge version 2.0’. After all, why should all members have to pay for administering a tax that applies to only 1% of contributors? 

As usual, I am keen to engage in some exciting super conversation (so I can spare those around me for a change), therefore, let me know what you think about the possible implementation of this or the other super reforms that were announced in the Budget. Good, bad, ugly etc…

More Budget commentary coming shortly…..

Yours in super,

Hans

P.S. www.budget.gov.au has all the Budget details. Enjoy!

Hello fellow super enthusiasts,

Those of you who are like me, and scour superannuation publications for any new stats, insight or tid-bits will have no doubt seen the APRA Insight Issue 1, 2012 (let’s just call it “Insight”) which was released on 23 April. Aside from all the usual goodies, yes I am referring to asset growth numbers, membership changes, contribution data, and benefit payment details; Insight also contained a good section on MySuper.

No, not my personal super…I’m not saying my super… I’m talking about MySuper – and if you’re asking what the difference is, this is the wrong blog for you!

Anyway, Insight included some interesting detail about MySuper including;

• the expected timetable
• information regarding trustee preparedness
• more clarity around product flexibility

The key point I want to discuss in this blog is the following excerpt from page 45:

“…there are some features of a MySuper product that may be varied across members, in particular administration fees and insurance, without the need to create a separate MySuper product. A MySuper product can also be white-labelled for different categories of members, potentially reducing the number of MySuper products a RSE licensee may choose to offer.”

From my vantage point, this provides a fair bit of flexibility around what can constitute a MySuper product and might remove some of the pain for funds which have distinct categories of members.  At the same time, I have to ask;

• How will this meet the MySuper transparency test? 
• Will this make it more difficult for members to compare MySuper products using the APRA MySuper League tables – as fees and costs will be a range rather than a fixed number?

What do you think? Is this a good thing or a bad thing from your perspective?

Yours in Super,

Hans

Hello fellow super enthusiasts,

Well for those of you wondering what to do with your weekend, I have the answer! Tranche 3 of the MySuper legislation has been released for consultation. Yes that’s right, the Exposure Draft and Explanatory Memorandum (a sizeable 79 and 85 pages respectively) are now available and you can find them here.

This should fill in a few blanks regarding the provisions relating to:

• Superannuation fees
• Intra-fund advice
• Insurance
• Collection and disclosure of information
• Default funds in modern awards and enterprise agreements
• Moving accrued default balances to MySuper
• An exception for defined benefit funds,  and
• New requirements for eligible rollover funds

And by the way, if that’s not enough reading for you; APRA has released 11 draft prudential standards which you can find here.

So happy reading and I look forward to hearing your thoughts on Monday!

Yours in Super,

Hans

“The report of this Blog’s demise was an exaggeration”.  Thank you Mark Twain and thank you to those who have enquired as to whether I am still alive or not, the answer is yes, and I am well.  I know there has been a bit of a blog drought…but frankly, I’ve been busy with the whole Stronger Super thing. You might have heard of it?

Recently, I’ve been attending a few hundred (…thousand even) meetings about Stronger Super, or “Simpler Super”* as I have heard it called. Which makes me think, is Stronger Super going to be simple to implement? No. But will it be better? I’d almost bet my clogs it will be as long as it meets a simple but all important test! Is it in the best interest of the member?  

But as I’ve been saying for quite a while now, it is not going to happen without planning, coordination and preparation.  Your fund/provider (and the government!) should already have a good idea about what this industry (and therefore the member/employer experience) is going to look like in say 2020, and work backwards from there.

I recently attended the Conference for Major Superannuation Funds (or CMSF) 2012 and was privileged to chair a “Stronger Super” session with the government’s architect (and builder!) of SuperStream.  If you are interested, here is a link to the video of this “Stronger Super – An Industry Overview – session”.

http://aisttv.tv/conferences.  (On the right side, scroll down to the 7th presentation with the title “CMSF 2012 – Stronger Super Reform – Special Presentation”.)

Note that this is not a particularly technical session but more about the likely process funds will need to follow to make sure they are “SuperStream ready”. The panel also discusses some of the significant strategic issues that funds and providers will need to consider today.  The main message is that funds cannot afford to wait until all legislation is available but must start planning today if they have not already.

What is your fund/service provider doing to prepare? Have you undertaken any risk analysis, strategic planning etc.? What information would you need to complete your analysis and who is best to provide this information?  Let me know. I’m keen as mustard to hear from you!

Yours in (Stronger) Super,

 Hans 

 *Simpler Super was a Government initiative in 2007 that set out to simplify superannuation arrangements for retirees, making it easier to understand and improve incentives to work and save.

Source: http://simplersuper.treasury.gov.au/

Hello fellow super enthusiasts!

Saturday 20 August, 2011 marked a special day in my heart…it was of course, the 20^th birthday of our dear friend, the Superannuation Guarantee (SG). It was a dark and stormy night – oh sorry, wrong story… It was a budget speech given on 20 August, 1991 by the then Treasurer John Kerin where he first announced the concept of SG. A year later, it would become law.

When first introduced, the SG started at a measly 3% before gradually increasing to the 9% we know and love today. However, getting it to 9% wasn’t easy and at the time, there was a lot of commentary suggesting that lifting the SG would result in substantial costs to employers with the follow on effects of job losses, a rising unemployment rate and even businesses going broke. Let’s not forget that we were in the middle of “a recession that Australia had to have”.

Interestingly, what the 9% SG in fact did was assist the economy in enduring the global financial crisis, (and we didn’t fair too badly in comparison to our international neighbours) improve dignity in retirement and positively affect economic growth. And cop a load of this, when the rate of SG was increased from 3% to 9%, unemployment rates actually dropped along with real unit labour costs…just a bit of food for thought.

So in my humble opinion and it is very humble, I think it’s time. Time we took the next step down the retirement reform journey and headed for the sign that reads ‘dignity in retirement’ for everyone because that’s what this is all about. Treasury has estimated that lifting SG to 12% means people aged 30 today, on average weekly earnings, will end up with an extra $108,000 in super when they retire. Not exactly small change is it! 

With that, I’ve got some questions for the three people reading this:

• What do we need to do as an industry to get SG to 12%?
• Is 12% enough, should we just aim higher and be done with it?
• Lifting the retirement age overseas saw people out with their signs and megaphones, so why aren’t people rioting in the streets to support the SG increase?

With that, it’s cup of tea time.

Yours in Super

Hans

Hello fellow super enthusiasts!

In my last post, I mentioned that the Medicare Clearing House team is looking at new opportunities to help promote the facility and its benefits to hundreds of thousands of small businesses across the country.

Well, the Government has now announced it is undertaking a massive mail out campaign to over 680,000 small businesses to do just that! You can read more about it here.

So what do you think? Do you have any experiences with the Clearing House that you’d like to share? Let me know.

Yours in Super

Hans

Greeting Fellow Super Enthusiasts!

This week we have a guest blog from the multi-talented Melissa Birks, Superpartners’ Customer Experience Implementation Manager. Melissa has been in the industry almost as long as I have … well, not quite considering she is much younger….but she is certainly as knowledgeable in all things Super. I’m sure you will enjoy her wise ranting this week while I put my feet up.

Yours in Super

Hans

You vs James Packer

Picture this – you buy a new home and need to take out a mortgage of $400,000.  On the same day James Packer buys another waterfront mansion in Sydney for $4.5 million dollars.

Both of you head off to the bank to negotiate your mortgage rate (well, to be honest the bank would probably come to James).  Who do you reckon will get the better rate on their mortgage, you or James?

Or imagine you’re buying a new car and it’s you vs. James again, you’re getting a nice, reliable Toyota Corolla and he’s buying a top of the range BMW.  Will you or James get a bigger percentage discount?

I think we can agree that unless you’re a master negotiator James is going to get a bigger discount and lower rate than you because the banks and car dealers see the potential for lots more big deals in the future.

The same outcome occurs when you’re investing your money.  You’ll get a better rate of return with lower fees when you’re negotiating to invest $10 million than $10,000.

The bottom line is that for most Australians the ‘mates rates’ deal is out of reach…or is it?

One of the main reasons Industry Super Funds were formed was to allow Australian workers, earning a working wage, to have access to the same deals that the richest and most powerful Australian does.   The average balance for a member in an Industry Super Fund is $20,000 – not much negotiating power there.   But, when it’s combined with thousands of other accounts in a collective investment; the playing field changes.  The top four funds that Superpartners administers have a collective $76 billion to invest.  Compare this to James Packer’s net worth of $5 billion and you can see the Industry Super Funds are in a very strong position to negotiate the best deals for their members.

This means that working Australians get access to the lowest fees, the best rates and the most favourable terms for their second biggest financial asset; their super.  A better deal means a better outcome for their retirement and that’s got to be a good thing for everyone.

Your thoughts?

Melissa Birks

Hello fellow super enthusiasts!

If you’ve been reading each and every one of my posts (surely someone is?), you’d have heard me bragging about the Medicare Clearing House. Specifically, the fact the Clearing House has now been operating for one year and has been producing fairly solid results in terms of uptake and output.  However, a little birdy tells me that the Clearing House team is now looking at new opportunities to raise awareness of the Clearing House services and promote the facility to hundreds of thousands of small businesses across the country.

The ATO, on behalf of the Department of Human Services, is looking at mailing a letter and flyer to small businesses that are likely to fit the Clearing House eligibility criteria. Overall, the pack would be sent to over 683,000 small businesses, via a staggered campaign commencing mid-August and ending mid-November 2011.

This is great news as the data coming out of the Medicare Clearing House is top notch which makes life as a humble administrator much easier. Therefore, the more data from Medicare, the merrier…..hmm, bit early in the year for Christmas references, but that’s ok!

If you’re still reading, why not drop me a comment about your experiences with the Medicare Clearing House…good, bad, ugly, let me know.

Yours in Super

Hans

Hello fellow super enthusiasts!

Some of you already know that I often can be found at airport lounges either on the way or just coming back from yet another super conference.  Well, do I have some good news for you!  There’s a super conference all about super admin coming up!  How timely this is given that we are about to expect Minister Shorten to announce details on Stronger Super, including the all-important SuperStream!

So what is this super admin conference I hear you say…?

Each year, the AIST Superannuation Administration Symposium (or SAS) brings together the best in local and international experts to address current issues, raise new ideas and challenge the way you think about the future of superannuation administration, and this year is no different!

So, don’t put it off any further (I know you want to attend) and bring a colleague with you! They will thank you for years to come! 

Have a look through the program for full details. My picks are:

Lessons from the US – Call Centre Case Study

Stronger Super – what you need to know

Technology…to infinity and beyond

A propos… yes, I will be there (in fact I am chairing a session) and I look forward to meeting you and sharing some super ideas on the future of super admin.

Yours in Super

 Hans

Hello fellow super enthusiasts!

I’m back on deck now as the family and I have returned from sunning ourselves on the NSW coast…you missed me right?

Can I just say that whilst having a break is nice, it makes you realise just how quickly the bank account erodes when there is no money going into it…only out of it. As usual, that got me thinking about super and what this means, so I was pleasantly surprised to find that the ASFA Retirement Standard was updated while I was away.

The new figures released show that retirees will now need an extra 600 bucks p.a. to live comfortably, compared to the last quarter. Ouch. That means a comfy lifestyle will cost a couple about $54,500per year and a single, around $39,800. Living a more frugal existence is obviously cheaper, but it still equates to about $31,200 and $21,500 for a couple and single respectively.

I wonder how much you need if you still have your four kids hanging around? I have a feeling the amounts would be a lot higher…double maybe? More like quadruple! 

Either way, the numbers show that we need to be diligent with our super and for those of us who aren’t engaged like I am (it is perfectly normal to have every statement you’ve ever received colour coded in a binder), we need to make sure the system if efficient.

It’s like trading in the fuel guzzling, but good looking supercar to a reliable, yet smart looking and responsible hybrid.    

On that note, I’m off to check the millions of emails that have piled up while I was away….most of which is fan mail I’m sure.  

Yours in Super,

Hans