Lifting SG key to minimising superannuation erosion – Deloitte
The Federal Government may be able to contain the erosion of superannuation assets to as little as between 6% and 8% but only if ends its hardship early release superannuation on 30 December, as planned, and allows the on-schedule increase in the superannuation guarantee to 12%.
That is part of the bottom line of a new analysis conducted by major consultancy, Deloitte as part of an update of its Dynamics of the Australian Superannuation System.
The Deloitte projections are based on the following fundamentals:
- Total amount withdrawn due to early release of super of $45 billion;
- Reduced contributions due to current effective unemployment rate of 13.3%, which is expected to continue through to end of 2021; and
- Allowing for actual returns for FY20, and lower short-term investment returns for FY21 and FY22 (due to COVID-19 effects), before returning to the long-term average.
Deloitte superannuation partner, Russell Mason said that on that basis, the projected assets at 30 June 2038 are expected to fall from the previously projected value of $9.8 trillion to a revised estimate of $9.1 trillion – a decline of roughly 6%.
“For comparison purposes, the projected assets at 30 June 2030 (i.e. in ten years’ time) have been revised down from $6.3 trillion to $5.8 trillion – a decline of almost 8%,” he said.
Mason said the projections, developed by Deloitte actuary, Diane Somerville, assumed a gradual improvement in business conditions as companies adapt to COVID-safe requirements and assumed that a vaccine would become available in the next two years.
He said the assumptions also included lifting the SG to 12% and ending the early release program on 30 December, as announced by the Treasurer, Josh Frydenberg.
Recommended for you
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
The ETF provider has flagged a number of developments as it formally enters the superannuation space through a major acquisition.
While all MySuper products successfully passed the latest performance test, trustee-directed products encountered difficulties.
Iress has appointed Insignia Financial’s former general manager of master trust and insurance products as its newest CEO of superannuation, who will take over from Paul Giles.