Along with this raft of legislative change, the Australian Securities and Investments Commission (ASIC) has also introduced new licensing requirements for accountants who work with and advise Self Managed Superannuation Fund (SMSF) Trustees. Only approx. 10% of accountants have complied with these changes to date.
As such if you, as many, consider your accountant would be your 1st port of call for Financial Advice, they will likely advise you, they are unable to provide the information you require & should consult a qualified Financial Adviser / Planner.
This is general advice only and you should seek expert financial advice from a qualified financial adviser before acting on any of the information covered in these topics.
The 6 good news points if we move to 12% Superannuation Guarantee (SGC)
It will assist in the Australian retiree aspiration to be self funded in retirement. Recent Core Data analysis found that approx. 80% of couples in retirement wish to spend approx. $60,000 in retirement or as a single approx. $43,000. The full age pension provides approx. $36,000 which is just above the poverty line.
Many investors have been hoodwinked into thinking massive leverage into residential property is the ‘silver bullet’ for all of their retirement funding needs. This is a far riskier strategy than taking advantage of the compounding effect of 12% SGC.
2 million Australians are already getting the advantage of 12% SGC and as such face a much more comfortable lifestyle in retirement.
There are currently 23 retirees to 100 workers at present. This will rise to approx. 30 by 2050. Accordingly, something has to give. If we don’t see a rise in the number of self funded retirees, the alternative is increased taxation and reduced welfare, neither of which are popular political agendas.
The Australian superannuation system is a worldwide success story. There is now approx. $2.8 trillion in the Australian super system. This represent on average approx. $225,000 for each of Australia’s 12 million workers. If you went back to the 1990’s, Australian workers had next to no savings.
The number of Australians on the full age pension has been declining rapidly, mainly due to superannuation and currently stands at approx. 70%, compared to approx. 80% in the 1990’s. If SGC increases to 12%, this figure should reduce to approx. 50% by 2050.
So let us look forward to the magic of 12% SGC 'compound interest' unfold for Australian investors.
As Einstein said “Compound Interest is the most powerful force in the universe".