Frydenberg flags super freeze

 

Treasurer Josh Frydenberg has weighed in on the superannuation debate in the clearest sign yet that the government may be considering a freeze to the legislated increase.

 

 

In a speech at the National Press Club, Treasurer Josh Frydenberg echoed the findings of the Retirement Income Review (RIR) and said that 9.5 per cent superannuation was enough to provide an adequate standard of living in retirement. 

“This is why, as the Prime Minister and I have said, we must rightfully and carefully consider the implications of the legislated increase to the superannuation guarantee before the 1st of July this year. This is even more important as we are in a time when our economy is recovering from the largest economic shock since the Great Depression,” Mr Frydenberg said.

The RIR found that there is a trade-off between wages and superannuation, with a median earner approximately $32,000 worse off over the course of their working life. 

While the Morrison government has so far shied away from using the findings to freeze the increase, Mr Frydenberg said that he would “remain sceptical of those who, in the pursuit of their own interest, seek to restrict the legitimate choices Australians should have to save for their retirement”. 

“It is simply not true, as some would have us believe, that there is not a limit to how high the superannuation guarantee can be increased in the name of delivering even higher retirement incomes,” Mr Frydenberg said.

“For some, there isn’t a problem that cannot be solved through higher rates of contribution to superannuation. These myths do not help Australians plan for retirement, or feel more confident and more secure in their retirement.” 

Mr Frydenberg also called on funds to create new products and guidance that would allow retirees to spend their super more effectively, noting that many passed away without spending the full amount.

“This is despite the fact that retirees today have not benefited from the superannuation system their whole working life. The review shows that, if nothing changes, by 2060 one in every three dollars paid out of superannuation will be as part of a bequest,” Mr Frydenberg said.

 

 

Lachlan Maddock
26 February 2021
smsfadviser.com

 

Hot Issues

  • End of year financial strategies

    With the end of the financial year approaching there may be some valuable opportunities worth discussing for you or your family, depending on your personal circumstances.

  • Budget 2021: Retirement Outcomes

    The 2021-22 Federal Budget unveiled a range of initiatives aimed at providing additional flexibility across the retirement savings system.

  • Videos to help understand financial planning topics.

    Often watching a short video is a quicker way to understand what can otherwise be quite confusing. The following titles have just been added to our website and can be accessed at any time and by anyone.

  • SMSFs still on top for member satisfaction

    SMSF members continue to report very high levels of satisfaction with the performance of their fund, according to rolling research.

Read more latest Financial Planning news articles

General Advice Warning

The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither Retirewell Financial Planning nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.