2017/18 an “excellent” year for super fund investment returns

2017/18 was an “excellent” year for superannuation fund investment returns, with the ‘median growth fund’ up a “very healthy” 9.2%, according to firm Chant West.

These returns took super funds to a ninth consecutive year of positive returns – equalling the record – and was well ahead of performance targets.

“Growth funds have now delivered nine consecutive positive financial year returns, averaging about 9% a year,” said Chant West senior investment manager Mano Mohankumar.

“The only other time we’ve seen such a long sequence of positive returns was from 1992/93 to 2000/01. This year’s 9.2% is better than most experts, including ourselves, expected a year ago. It’s also well ahead of the typical long-term return objective for the growth category which is CPI + 3.5%. With inflation running at about 2%, that translates to a target of about 5.5%.” Read more...

FASEA proposed standards should better recognise prior learning

The Financial Adviser Standards and Ethics Authority (FASEA) has been urged by the SMSF Association to provide more guidance and certainty to financial advisers on the recognition of prior learning.

SMSF Association Head of Policy Jordan George said it is essential that advisers have greater clarity on how their existing qualifications will be counted under the new standards being proposed by FASEA.

“Currently, the proposed FASEA education standards for existing advisers do not provide enough recognition for prior learning,” said Mr George. Read more...

Westpac to stop new SMSF lending from 31 July 2018

Westpac is set to soon stop new lending to SMSFs.

According to reports Westpac will stop new SMSF Limited Recourse Borrowing Arrangements (LRBAs) at the end of July.

Westpac told ABC Radio National:

“In order to simplify and streamline our self-managed super fund product we’ll be withdrawing from sale our SMSF home loan product and business lending to SMSFs, effective Tuesday 31 July 2018. We will continue to service and support our existing customers.”

There are many potential motivations for Westpac to stop new lending to SMSFs. The Banking Royal Commission is set to start holding public hearings into superannuation on August 6. But Westpac told the ABC that it had commenced a review of the products before the Royal Commission started. ASIC has also been concerned about aspects of lending to SMSFs. Actions by APRA may have also impacted the willingness of the banks to lend to SMSFs. Read more...

SuperStream for rollovers to be extended to SMSFs in 2019

The Government has released draft regulations to extend SuperStream for rollovers to SMSFs.

Currently only rollovers between APRA funds can be transferred using the electronic SuperStream system.

Under the draft regulations SuperStream for rollovers would be extended to SMSFs receiving or making rollovers on or after 30 November 2019.

“The Turnbull Government is supporting Australians who choose to manage their own superannuation through an SMSF by making it easier for them to roll their existing superannuation funds into an SMSF,” said Minister for Revenue and Financial Services Kelly O’Dwyer. Read more...

Sensationalist headlines hurt retirement outcomes, warns ASFA

The Association of Superannuation Funds of Australia (ASFA) has refuted criticism of the Australian superannuation system, saying it is working by producing superior returns and reducing fees.

ASFA said that “misleading analysis led to sensationalist newspaper headlines that only served to alarm Australians and detrimentally impact retirement outcomes,” without naming the newspapers.

ASFA rejected that the Australian super system lagged behind the rest of the world, saying it had instead delivered “superior” returns. The organisation pointed to statistics that, over the five years to 2017, Australian super funds had the highest average investment returns in the OECD. Read more...

Super gender gap at retirement is 43%, or $132,000

The superannuation gender gap just before retirement is currently 42.7%, or $132,000.

Roy Morgan Research finds that the average superannuation held by women planning to retire in the next twelve months is $177,000 – which is 57.3% of the balance of men at the same stage, who have $309,000 on average.

The super gender gap has shrunk slightly since 2008, when it was 44.76% ($78,000 to $143,000).

“Despite a great deal of publicity being given to this issue over the last decade in an attempt to close the gender gap in superannuation, there has been no real progress. This is evidenced by the fact that it has taken ten years for the female average superannuation for intending retirees to move from 55.2% of the male average to 57.3%,” said Roy Morgan Research. Read more...

BGL hasn’t forgotten about Simple Fund Desktop users

BGL added over 80,000 SMSFs to Simple Fund 360 in the previous financial year, but hasn’t forgotten about customers still using Simple Fund Desktop.

According to BGL it added 82,697 SMSFs to Simple Fund 360 in 2017/18, taking the total on the cloud software to 159,767. It added more than 1,700 firms, with the total at the end of the financial year at 4,214.

Part of this dramatic increase is likely due to customers transitioning from Simple Fund Desktop to Simple Fund 360, however BGL Managing Director Ron Lesh said users of the desktop software haven’t been forgotten. Read more...

ECPI calculations just got a lot harder, says Class

New ATO guidelines have “significantly” changed industry practice of how ECPI is calculated, says Class.

Whereas previously the industry approach was to use either the segregated or unsegregated method for a whole financial year, the ATO guidelines require a different approach for the 2017/18 and later years.

Class has released updates to Class Super which it says will streamline compliance with the new rules.

“For the financial year ended on 30 June 2018 onwards, a fund must use both the segregated method (for the period while it is in 100% pension phase), and the unsegregated method (for any periods where it is in a mix of both pension and accumulation phase). The ECPI percentage must only be applied to income and expenses falling within the unsegregated periods i.e. actuarial certificates now only cover the periods where there are unsegregated assets in the fund,” said Class. Read more...

Alliance launches anti-Labor imputation credit policy website

The Alliance for a Fairer Retirement System, which includes the SMSF Association and National Seniors Australia, has launched a website as part of its campaign against Labor’s imputation credit policy.

Labor has a policy of stopping the refunding of imputation credits for most taxpayers, a policy which the Alliance says will be detrimental to retirees and small businesses – who can lodge their concerns about the policy on the website.

The Alliance says there is growing scrutiny about Labor’s policy, including a disputed Treasury analysis. Read more...

ANZ & CBA accept Undertaking over distribution of super products in branches

The ANZ and CBA have reached an agreement with ASIC to change how they distribute some of their superannuation products.

ASIC announced that it has accepted enforceable undertakings from the two banks, following an investigation.

The regulator says it found the banks had a “common practice” of offering their superannuation products – Smart Choice Super for ANZ and Essential Super for the CBA – to customers at the conclusion of a fact-finding process. ANZ called its process an ‘A-Z review’ and CBA called theirs a ‘Financial Health Check’. Read more...