Feb 19, 2021

Our Insights

Your superannuation will have a huge influence on your retirement lifestyle and it has never been more important for Australians to take a renewed interest in super developments.

2020 was certainly a rollercoaster for super funds, with some taking a hit, withdrawing funds to support themselves, while others saw positive returns. Now, with more changes to super commencing in 2021, it's crucial to get proactive.

What happened in 2020?

In early April, the Australian Government allowed Australians who were financially struggling from COVID-19 to withdraw up to $20,000 from their super over the 2019-20 and 2020-21 financial years, without being taxed. For many it was a lifeline, but it also came with a big cost to their future selves. Research showed that people could lose between 50,000 and $120,000 from their final retirement figure, depending on their age at the time of withdrawal. Insurances were also jeopardised and risked not being available on fully withdrawn accounts or on funds with balances less than $6,000. 

But despite these challenges, the average superannuation return was still higher in 2020 for Australians compared to previous years. In fact, research by superannuation providers Chant West and SuperRatings revealed that, after fees, super funds returned an average of 2.9% - 3.5% across the year. Furthermore, median growth funds were up by 3.7% and the top 10 performing growth funds were up by over 5%.

What are the new changes in 2021?

In the 2020-21 Federal Budget and 'Your Super, Your Future' proposal, a variety of reforms to super were introduced. Some measures provide obvious benefits for individuals, such as increased transparency and accountability from super fund administrators about investment decisions, and the online publishing of an annual performance test on a government website to reveal funds that aren't acting in the best interest of members. A raise in the Superannuation Guarantee (SG) will also see the minimum amount of super paid by employers increase to 10%. 

However, one change which is stirring discussion is the 'stapling' of super funds to members, to be implemented from July 2021. This means that instead of multiple super funds being created every time you get a new job or being forced to go with a super fund chosen by your employer, you will have your original super fund tied to you throughout life.

On one end of the debate is the Australian Government, which states this measure will help increase super balances and remove duplicated fees for members. However, some financial experts and super fund representatives argue this change has major repercussions for those who start off with a poor-performing, high-fee super fund, while only those with a strong-performing fund to begin with will be at an advantage.

What is your next best move? 

Tackling your superannuation isn't easy, especially if you made panicked decisions amidst the hype of the pandemic that saw you lose potential growth. That's why 2021 is the perfect time to put yourself back on the right pathway to achieving your retirement goals. 

Making extra contributions now and increasing the amount of your regular instalments, if it's within your financial means, could be a potential way to boost your retirement funds and replenish any losses experienced from withdrawing money. Putting away more money now could help set up your future self for success. 

So, it's more important than ever for you to work with a financial adviser who can provide you with sound understanding and advice about your superannuation, and provide strategies for your retirement plans that are in your best interests. 

Don't wait any longer! Talk to the team at Calder Wealth Management. Call us on (08) 8373 3333 to schedule your free initial appointment.

Written by Stefan Miraglia at Calder Wealth Management.

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.