News - Luka Group Chartered Accountants & Financial Advisers

Understanding longevity risk in retirement

Tue, 28 Oct 2025 22:47:22 GMT

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Australians are living longer than ever before due to a combination of factors including improved healthcare, better living conditions and over all better quality of life. With this longevity comes the challenge of ensuring financial security throughout a longer retirement.

Data from the Australian Bureau of Statistics (ABS) shows that life expectancy at birth is now 81.1 years for males and 85.1 years for females1. Despite the increases in these averages, many Australians will live well beyond these ages, making planning for your retirement income more important than ever.

What is longevity risk?

Longevity risk refers to the possibility of outliving your savings. Living longer allows you to enjoy the fruits of life for longer but it also means planning carefully to ensure your savings last as long as you do. For Australian retirees, this is especially important, as the Age Pension alone may not be enough to cover all living expenses over an extended period.

According to the Challenger Retirement Happiness Index2, 72% of Australians aged 60+ report that the rising cost of living has adversely impacted their financial security, with 34% admitting the impact was significant. This highlights the importance of planning for longevity risk to maintain financial confidence in retirement.

Building financial security for the future

To ensure a comfortable and secure retirement, it’s important to take proactive steps to manage longevity risk. Here are some key considerations:

1. Understand how long your retirement savings may last

Knowing how long you might live can help you plan your finances to last throughout retirement. Factors like health, lifestyle and family history can play a role in estimating life expectancy.

2. Understand your income sources

Retirement income can come from a mix of sources, including the Age Pension, superannuation, personal savings and investments. For many Australians, the Age Pension alone may not be enough to cover all living expenses, especially if superannuation or other savings run out. Adding a source of regular income such as a lifetime annuity to your retirement income plan can help you manage the risk of outliving your savings.

By using some of your super or other money to set up a lifetime income stream, you could create an additional layer of secure income that complements the Age Pension, if you are eligible. This approach helps to provide peace of mind by ensuring you have a regular source of income that can cover essential needs throughout your life. This can form part of a comprehensive retirement income plan.

3. Use planning tools and resources

Make a budget
The Age Pension is a key safety net for many Australians. Consider how it works, including eligibility and its role alongside superannuation and lifetime income streams.
For personalised guidance to help you make informed decisions about your finances, consider accessing free services like the Financial Information Service (FIS) offered by Services Australia or see a Financial Adviser.

The benefits of financial security

Financial security can transform retirement into a time of freedom and fulfilment, allowing retirees to focus on what truly matters. With a lifetime income stream you can enjoy meaningful activities like traveling, pursuing hobbies or spending quality time with loved ones without the stress of financial uncertainty.

The Challenger Retirement Happiness Index2 reveals that 41% of Australians aged 60+ see "having enough money to enjoy retirement" as essential for happiness, while 33% value knowing their money will last. This financial confidence provides the foundation for a retirement filled with confidence, happiness and peace of mind.

Planning for a confident retirement

A well thought out retirement plan provides the confidence to enjoy life without the constant worry of running out of money. By understanding longevity risk and taking proactive steps, you can feel more confident that your retirement income will last as long as you do.

Source: Challenger

Finance 101: understanding interest rates and why they matter

Wed, 11 Jun 2025 04:44:00 GMT

Learn how interest rates influence loans, savings and investments, and find out why staying informed about interest rates can empower your financial decisions. Whether you're planning to buy your dream home, save for a brighter future or simply manage your daily finances, interest rates play a key role. Here’s why they matter when planning your financial future.

What are interest rates?

Interest rates are essentially the cost of borrowing money or the reward for saving it. When you take out a loan, whether it's for a car, home or business, you'll pay back the amount borrowed plus an additional percentage per year, known as the interest rate. Conversely, when you save money in a high interest bank account, an interest rate determines the extra money you earn on your savings.

What is the RBA and how do they control interest rates?

The Reserve Bank of Australia (RBA) is Australia’s independent central bank. The bank conducts the nation’s monetary policy and issues its currency. The RBA determines the cash rate target, which is a base rate that impacts other interest rates such as mortgage or deposit rates.

Why does the RBA raise or lower rates?

The RBA adjusts the cash rate target to preserve full employment and the economic prosperity and welfare of Australia. The RBA might raise rates to curb inflation when the economy is growing too quickly, as higher rates can help cool down consumer spending and borrowing or investments. On the other hand, the RBA may lower rates to stimulate economic activity during a slowdown. Lower rates make borrowing cheaper and encourage spending and investment, which can help boost employment and economic growth. By adjusting interest rates, the RBA aims to keep inflation within a target range of 2-3% and support the overall health of the Australian economy.

How do banks set interest rates?

The official cash rate isn’t the only factor that influences bank lending rates but it’s one of the most important.

To make money, banks need to lend money out at a higher rate than they borrow – a home loan is riskier than a deposit account (a borrower can default on the mortgage or go bankrupt, whereas deposit accounts are guaranteed by the Australian government), which is why the interest rate you receive on your savings account tends to be lower than the interest rate you pay on your home loan. So an increase in the cost of borrowing money can affect you in different ways, depending on whether you’re a net saver or a borrower.

Why do interest rates matter?

Impact on loans and mortgages

For Aussies looking to buy a home, interest rates are a key factor. A lower interest rate means lower and more affordable monthly repayments (everything else equal), On the flip side, higher rates can increase your costs, affecting your budget significantly.

Savings growth

Interest rates also matter for your savings. Higher interest rates mean more growth for your money over time. If you're saving for a holiday, a car or retirement, a good interest rate can help you reach your financial goals faster.

Economic influence

Interest rates are a tool used by the RBA to control economic activity. By adjusting rates, the RBA influences inflation, employment and economic growth. Higher rates might slow down borrowing, investing and spending, while lower rates can encourage it.

Why should you care about interest rates?

Personal financial planning

Understanding interest rates helps you make informed decisions about loans and savings. Whether you're looking to buy a house or save for the future, knowing how rates affect your finances can guide your choices.

Budgeting

Interest rates can change over time, impacting your monthly expenses. Staying informed allows you to adjust your budget accordingly, ensuring you're prepared for any changes in your financial commitments.

Investment opportunities

Interest rates also affect financial investments. They can influence stock market performance and property values. By keeping an eye on interest rate trends, you can make strategic investment decisions.

Economic awareness

Interest rate movements are a reflection of the economy's trajectory. By understanding them, you gain insight into broader economic conditions, helping you navigate financial challenges and opportunities.

Source: AMP

Planning for retirement? Start with these 5 steps

Wed, 11 Jun 2025 04:42:00 GMT

#1: Set clear retirement goals

The very first step in retirement planning is to define what you want your retirement to look like. When you hear the word retirement, what do you think of?

Consider the following questions:

When do you want to retire? Determine your ideal retirement age, keeping in mind that it may affect your savings strategy. While most of us may dream of retiring early, there are generally two retirement age rules that affect when most Australians can retire. These retirement age rules are the same for both men and women.

Age 60 : this is the earliest age where it’s possible to access your retirement savings under the ‘retirement’ condition of release or start a ‘transition to retirement’ pension.
Age 67: this is the age when you can access Australia’s Age Pension, provided that you meet the eligibility criteria – which includes a residency test, income test and assets test.

What lifestyle do you envision? Think about where you want to live, what activities you want to pursue and whether you plan to travel. Maybe it’s extensive travel, volunteering for a charity, spending more time with your family and friends or even still working part-time.
What are your anticipated expenses? Estimate your future costs, including housing, healthcare, travel and leisure activities. You may also want to financially help your children or grandchildren.

Having a clear vision will help you set specific, measurable goals.

#2: Assess your current financial situation

Next, take stock of your current finances to understand your starting point. This includes:

Income sources: Identify all sources of income, such as salaries, rental income or investment returns.
Assets and liabilities: List your assets (savings, investments, property) and liabilities (mortgage, loans) to gauge your net worth.

This assessment will help you determine how much you need to save and invest to reach your retirement goals.

You should also understand how much you currently have in super. Super is a long term investment vehicle that carries you through two phases of life. There is an accumulation phase followed by a retirement phase but it’s important to note that these aren’t mutually exclusive.

You can have some of your super in an accumulation account and some in a retirement account as you navigate your way between the two. Understanding the difference is important though, as each phase has different tax treatment, rules and potential strategies.

#3: Estimate your retirement income needs

So, how much is enough? While we all hope for a simple answer, how much money you need in retirement differs for everyone.

How much are you spending today? Do you think you’ll spend more, less or the same in retirement? And by how much: 5%, 10%?

Consider:

Government benefits: understand your eligibility for the Age Pension. For information about payments for veterans, see income support on the Department of Veteran’s Affairs (DVA) website. For other types of payments, including carers allowance, use Centrelink’s payment finder.
Pension plans: if you have a pension, understand its benefits and when they will be available.
Withdrawals from retirement accounts: plan how much you’ll need to withdraw from your savings to cover any gaps.

Consider trying a retirement calculator to determine how much you’re likely to have if you continue saving at your current rate and compare that to how much Association of Superannuation Funds of Australia (ASFA) indicates you might need.

#4: Create a savings and investment strategy

With your retirement income needs estimated, develop a strategy to accumulate the necessary funds. This involves:

Setting a savings target: Based on your income needs and how much you’ve saved so far, determine how much you need to save annually.
Choose appropriate investment options: Decide how to invest your savings, balancing risk and return. Diversification is key to managing risk in retirement. As you approach retirement you may prefer to dial down the risk of your investments (both inside and outside of super) and opt for a more conservative strategy. Speak to a financial planner – they can help you with this. It is also important that you understand and review how your super is invested.

#5: Monitor and adjust your plan

Retirement planning is not a one-time task; it requires ongoing monitoring and adjustments. Regularly review your financial situation, savings progress and market performance. Consider:

Life changes: Major events, such as marriage, divorce, or the birth of a child or grandchild, can impact your retirement plans.
Review your investments approach : Regularly review your investments to ensure they still meet your financial goals, risk level and personal circumstances. A financial planner can also assist you with this.
Manage withdrawal rates: Be aware of how much you’re withdrawing from your pension (if you have one) each year to avoid going through your savings too quickly.

Establish a routine for annual reviews or consult a financial planner to keep your plan aligned with your goals.

#Extra tip: start planning today

Whether you’re 25 or 55, it’s never too early or too late to start preparing. The earlier you start planning for retirement, the more prepared you'll be for the future you envision. And by acting early, you can take advantage of compound interest, allowing your savings to grow significantly over time.

Plus, starting early gives you the flexibility to navigate unexpected expenses and life changes without financial stress.

Don’t wait for the perfect moment – begin mapping out your retirement goals today. Your future self will thank you!

Source: MLC

Why you need insurance, what are your options?

Wed, 11 Jun 2025 04:38:00 GMT

Insurance; we don’t need it until we do. Learn all about the value of insurance for protecting your health, income and loved ones when life throws you a curveball.

Protecting your wellbeing and your wallet

“Do I really need this insurance?” It’s probably a question you’ve asked at some point when deciding whether to part with your money. But maybe the real question should be “What if I became ill, how would we cope?”

Your health and wellbeing is the most important asset you have, so it pays to put in the hard yards and get your head around the tricky topic of insurance. Illness or injury can strike at any age or life stage, and it certainly doesn’t wait for the most convenient time to happen. Having peace of mind about having enough money if things take a nosedive could be your best investment yet, as well as helping you sleep at night.

When insurance is a good idea

Often insurance can come on your radar off the back of someone you know falling really ill or when you read something scary in your news feed. These events can make you stop and think but you don’t need to wait for a warning signal. In fact, getting on the front foot ahead of major life changes is often the best reason to get your insurance sorted.

Here are some scenarios to have a think about:

Landing your dream job – no job is completely secure and if you’re about to ramp up your income your lifestyle is probably going to upgrade too. If one day you lost your income, how long would you be able to pay the bills?
Switching to an income that’s up and down – while the gig economy or a well paying contract has its lifestyle benefits, there is a trade off. You don’t benefit from things like sick leave or annual leave and if your income takes a sudden downturn, you might be left struggling for cash.
Starting a family – when you settle down with a partner or have kids, it’s not just about you anymore. You’re going to have someone who truly depends on you and what happens to you will have a big knock on effect on them. Starting a family might also mean taking on a bigger mortgage.
Getting your head around the important lingo – Insurance jargon is one thing you’ll need to make peace with as you navigate your options. If you’ve looked at the insurance section of your super statement, you may notice ‘Death’ insurance – but did you know it may also cover you for a terminal illness diagnosis? And what on earth is TPD? How do you know what constitutes Total and Permanent Disability? Don’t worry, we’ve got all the details below.

Reading the fine print

But first, a word about insurance policies. While having a general understanding of what type of policy covers what, it’s no substitute for reading your insurance product disclosure statement (PDS) and knowing exactly what you’re getting. Just like travel, or home and contents insurance, policies and the amount they pay out can vary a lot. So it’s worth reading the fine print on something so important in your life.

Protecting your income

If you’re working and you, or your family rely on your income to cover the bills, you should be giving serious thought to taking out insurance to protect your income. You have two options for this:

Income protection – if you become ill or injured and can’t work for a short period of time, income protection will provide monthly payments up to around 70-85% of your income to help cover your expenses. This cover is available directly through an insurance company or via your super fund but it may not be automatic – you may have to opt in or apply for cover. Some generous employers may build income protection into a benefits package and pay your premiums for you.
Total and permanent disability insurance (TPD) – as the name suggests, this cover is designed for when you experience a permanent disability that prevents you from ever working again. For example, if you were to have a serious heart attack or stroke that required six months’ of rehabilitation and you’re unable to return to work again for a job you’re qualified for, this cover may pay out. Again, you can get this type of cover directly through an insurance company or via your super fund. In fact, this cover may already be automatically included within your super fund. Cover is also available outside super, where you can apply for ‘own occupation’ insurance. Instead of paying out only if you are unlikely to ever work again in any reasonable job you could do, own occupation cover will pay you if you can’t return to the job you were working immediately before you were injured or became ill.
Life cover – also known as ‘Death’ cover which pays a lump sum amount of money if you die. The pay out goes to whoever you nominate as beneficiaries or your estate. As with TPD, you may receive this type of cover automatically as part of your employer’s default super fund. And some life cover will also pay out if you are terminally ill, meaning you can use the funds to help your family before you pass away.

overing yourself for critical illness

One of the most important types of insurance you can get is the one you can’t get through your super fund. Trauma (also known as critical illness) cover will pay you a lump sum of money if you are diagnosed with a serious illness, such as coronary and cancer illnesses. These conditions often need years of treatment or rehabilitation, which can be very hard to manage without any financial support. Trauma cover can work hand in hand with income protection, which gives you regular payments instead.

Trauma cover isn’t cheap but it certainly pays off if you need it. And in the event you’re dealing with a serious and stressful treatment such as chemotherapy, you won’t have to worry about money or spend time and energy trying to keep earning an income.

One caveat about trauma cover – it doesn’t cover you for ‘low level’ strokes or cancer where your work is not going to be significantly interrupted. For example, if you need treatment once a week, this would not be considered a serious interruption and the insurer is unlikely to pay out your claim. Each policy is different and it’s important to understand what to expect before taking out any insurance cover.

At the end of the day, insurance is about removing the stress of not having enough money if you become unwell. What works for you might not work for someone else.

Source: MLC

Eight quick wins for managing debt

Wed, 11 Jun 2025 04:35:00 GMT

Managing debt can often feel overwhelming but there are several strategies you can implement to make the process more manageable and even accelerate your journey to becoming debt free. Here are some quick wins that can help you take control of your finances and reduce your debt more effectively.

Remember, the key is to stay motivated and consistent with your efforts. Every small step you take brings you closer to financial freedom.

1. Change your repayments from monthly to fortnightly

One simple yet effective strategy to save money is to change your repayment schedule from monthly to fortnightly. By doing this, you end up making an extra month’s worth of payments each year. Here’s how it works: there are 26 fortnights in a year, so if you pay half of your monthly repayment every two weeks, you make 13 full payments instead of 12. This can significantly reduce the interest you pay over the life of the loan and help you pay off your debt faster.

2. Attach an offset account to your mortgage

If you have a mortgage, consider attaching an offset account to it. An offset account is a transaction account linked to your mortgage and the balance in this account is offset against your mortgage balance when interest is calculated. For example, if you have a $300,000 mortgage and $20,000 in your offset account, you’ll only be charged interest on $280,000. This can reduce the amount of interest you pay and help you pay off your mortgage sooner.

3. Target the smallest debt first

While it might seem logical to target the highest interest rate debt first, focusing on the smallest debt can provide a psychological boost and help you stay motivated. This approach is known as the “debt snowball” method. By paying off the smallest debt first, you achieve a quick win, which can give you the momentum to tackle larger debts. Once the smallest debt is paid off, you can use the amount you were paying on that debt to make extra payments on the next smallest debt and so on. This method can help you see progress more quickly and keep you motivated to continue paying off your debts.

4. Seek a second job or side hustle

If possible, consider taking on a second job or side hustle to increase your income. The additional income can be used to make extra payments on your debts, helping you pay them off faster. There are many options for side hustles, such as freelancing, gig economy jobs or selling items you no longer need. Even a small amount of extra income can make a significant difference in reducing your debt.

5. Create a budget and stick to it

Creating a budget is a crucial step in managing debt. A budget helps you track your income and expenses, identify areas where you can cut back and allocate more money towards debt repayment. Start by listing all your sources of income and all your expenses. Categorise your expenses into fixed (e.g. rent, utilities) and variable (e.g. groceries, entertainment). Look for areas where you can reduce spending and redirect those funds towards paying off your debts. Sticking to your budget can help you stay on track and make steady progress towards becoming debt free.

6. Negotiate with creditors

Don’t be afraid to reach out to your creditors/lenders/banks to negotiate better terms. Many creditors/lenders/banks are willing to work with you if you’re struggling to make payments. You might be able to negotiate a lower interest rate, a reduced payment plan or even a settlement for less than the full amount owed. It’s always worth asking, as any reduction in your debt or interest rate can help you pay off your debts more quickly.

7. Use windfalls wisely

If you receive any unexpected windfalls, such as a tax refund, bonus or inheritance, consider using that money to pay down your debts. While it might be tempting to spend it on something fun, using windfalls to reduce your debt can have a long-term, positive impact on your financial health. Every extra payment you make reduces the amount of interest you pay and brings you closer to being debt free.

8. Avoid taking on new debt

Finally, while you’re working on paying off your existing debts, it’s important to avoid taking on new debt. This means being mindful of your spending and avoiding unnecessary purchases. If you must use credit, try to pay off the balance in full each month to avoid accruing interest. By focusing on paying down your current debts and avoiding new ones, you’ll be able to make more progress towards your financial goals.

Source: Money & Life

Score a $500 super bonus: the government super co-contribution explained

Wed, 11 Jun 2025 04:34:00 GMT

Imagine an extra $500 landing in your super fund, courtesy of the government, simply for being proactive about your financial future. If you're a low to middle income earner making after-tax contributions to your super without claiming a tax deduction, you could be eligible for this often forgotten about super boost. Here’s how it works.

How does the super co-contribution scheme work?

The superannuation co-contribution scheme is a government initiative aiming to assist low to middle-income earners save for their retirement. What that means is, depending on the amount of income you earn each year, the government may add to your super when you make a voluntary after-tax contribution, which you don’t claim a tax deduction for. The amount you receive will depend on how much you contribute as well as your income.

Are you eligible for a super co-contribution?

To be eligible for a super co-contribution from the government, generally you must:

make an after-tax contribution to your super fund, which you don’t claim a tax deduction for
lodge your annual tax return for the relevant year
have a total income that’s less than $60,400 in the 2024/25 financial year for at least a part co-contribution (more info on this below)
receive 10% or more of your income from eligible employment and/or running a business
be less than 71 years old at the end of the financial year that you’re making the contribution
have a total super balance below $1.9 million as at 30 June of the financial year prior to the year that you’re contributing
not have exceeded your non-concessional contributions cap for the year
not have held a temporary visa at any time during the financial year (unless you’re a New Zealand citizen or it was a prescribed visa).

What do you need to do to get the super co-contribution?

Provide your tax file number to your super fund

You don’t need to apply for the super co-contribution but you will need to make sure you’ve provided your tax file number to your super fund. Generally, your super fund can’t accept after-tax contributions, or receive co-contributions on your behalf, if you haven’t provided your tax file number.

Lodge your tax return

You’ll need to lodge your annual tax return for the relevant year. The Australian Taxation Office (ATO) will then use the information provided in your tax return and the contribution information from your super fund to work out your eligibility.

If you’re eligible, the ATO will automatically calculate the appropriate amount that’s owing to you and will typically deposit this into the super fund which you have made the contribution to. If you’ve recently retired and have closed your super account, it may be possible to have your co-contribution paid to you directly.

How much will the super co-contribution be?

If your total income is equal to or less than $45,400 in the 2024/25 financial year and you make after-tax contributions of $1,000 to your super fund, you’ll receive the maximum co-contribution of $500. If your total income is between $45,400 and $60,400 in the 2024/25 financial year your maximum entitlement will reduce progressively as your income rises. If your income is equal to or greater than the higher income threshold of $60,400 in the 2024/25 financial year, you won’t receive any co-contribution. You can use the ATO’s co-contribution calculator to estimate your entitlement and eligibility.

What counts towards your total income?

Your total income for this purpose includes your assessable income, reportable super contributions and any reportable fringe benefits, less any amounts you’re entitled to claim as a tax deduction for running your own business. Reportable fringe benefits typically arise where non-cash benefits are provided to you by your employer, such as a company car or lease vehicle.

Are there other things you should be across?

The income thresholds mentioned above are indexed each year in line with increases in average weekly earnings and may change in future financial years.
If you exceed concessional and non-concessional super contribution caps, additional tax and penalties may apply.
The value of your investment in super can go up and down, so before making extra contributions, make sure you understand, and are comfortable with, any potential risks.
The government sets general rules around when you can access your super, which typically won’t be until you reach your preservation age of 60 years old and meet a condition of release, such as retirement.

Where to go for further information

Check the ATO’s website for up to date information.

Source: AMP

Three ways to plan for your 30s

Wed, 11 Jun 2025 04:28:00 GMT

Turning 30 is often accompanied by a degree of increased financial responsibility. It’s an important milestone that generally means you have a little more financial experience under your belt. If you’re lucky, you’ve earnt your money a few different ways and probably even found more ways to spend it. So, how can your 30 something self be in the best position financially? Here are three money saving mantras to get you started.

Remember your super is super

While superannuation and retirement savings might sound uninteresting because you can’t touch it, it’s important to remember your super is “real money” and it’s yours! Investment earnings within super are concessionally taxed at a maximum rate of 15%, which may be lower than the tax you pay on investment earnings outside of super. This may mean more goes toward your future than if you were to invest outside of super.1

Generally, employers are required to contribute 11.5% of your ordinary salary and wages into a super fund on your behalf. If you are employed or self employed you can also choose to contribute extra amounts into your super via salary sacrifice, personal deductible contributions or after tax contributions, depending on your eligibility and caps on the amount you can contribute. If you are in your 30s you currently have to wait until your 60s before you can access any amount you have saved or contributed to super, however this presents a real opportunity to set things on the right course now to allow your savings to grow into the future. Most individuals can choose the super fund they want their super contributions paid into – and you can also choose how it’s invested. If you’re not sure how your super is currently invested, check your latest member statement or login to your super account online.

Don’t forget to safeguard your assets

Your 30s often bring with it the added responsibility of dependants such as a partner or family who can be reliant on you and what you bring to the household financially. So if you have people in your life who rely on you financially, it’s important to consider how they would cope if something unexpected were to happen you. Meeting household living expenses, mortgage or rent payments, plus increased care and medical costs may become more difficult without your ability to earn an income. There are four main types of insurance which can help protect you and your dependents in these circumstances. Life cover, total and permanent disablement cover (TPD), trauma cover and income protection insurance.

Life, TPD and trauma cover all pay a lump sum amount if you suffer an illness or injury and the insurance conditions have been met. Income protection insurance generally replaces a percentage of your insured income in the event you meet the insurance definition of being unable to work due to illness or injury. In certain cases you can look to hold some of these insurances through super which can be both a cost and tax effective strategy. However, keep in mind your super balance would be used to fund your insurance premiums, which would generally result in a reduced accumulated balance overtime.

Spend less than you earn

The first steps to improving your financial position and increasing your financial choice and autonomy is to make sure you’re not spending every dollar you earn. While it sounds pretty simple, putting aside a small amount on a regular basis could make all difference over the longer term. It’s good to start saving a percentage of your income to provide you with a safety net if something unexpected crops up – such as taking time off work, protecting yourself from increased expenses such as interest rate rises, or meeting unexpected health or medical expenses.

And finally …

Don’t forget to take the time and do your research so you can make informed decisions around your goals and objectives. You might also consider speaking to a financial adviser if you think you need a hand to make any decisions with confidence to make sure you move forward financially.

1. Australian Government Australian Securities & Investments Commission. “Tax & Super”. ASIC's MoneySmart, 1 July 2021, www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/tax-and-super.

Source: BT

How to find your lost super

Wed, 11 Jun 2025 04:26:00 GMT

Imagine finding thousands in super that you’ve lost track of. Here’s how you can check if you have any lost or unclaimed super.

There are over seven million lost and Australian Taxation Office (ATO) super accounts with a total value of $17.8 billion1 – a share of this could be yours. Don’t miss out on super you’ve earned! It’s easy to lose track of your super when you move or change jobs. However, it’s easy to find it and takes less than 10 minutes. Check with the ATO within myGov. This will allow you to see details of all your super accounts, including any you’ve lost or forgotten about and find any ATO held super – this is held on your behalf when your super fund, your employer or the government can’t find an account to deposit your super into. If you’ve recently opened a new super account, it may take up to six months to appear on MyGov. You can also find lost super using a paper form. See searching for lost super on the ATO website.

Combining your lost super accounts

There are many benefits to combining all your lost super and money with other super funds into one account.

Simpler fees: having your super in one account means only one set of fees.

Easier to manage: one place for contributions, paperwork and investing your super.

Avoid extra insurance costs: only one set of premiums if you have insurance with multiple funds.

If you are considering combining your super accounts, weigh up the benefits and features of each of super fund and make sure you understand any benefits that you have which may be lost before you roll over any monies. Don't forget your insurance. One or more of your funds may include insurance. Any insurance you have will be lost if you close your account. So, before you roll over any monies, make sure you have the appropriate levels of insurance cover.

How to prevent any lost super in the future

When you start a new job, tell your employer your super details so you know where your super is going. If you don’t let them know, they have to ask the ATO where your stapled super fund is. Make sure you update your contact details with your super fund whenever you move house or change your phone number/email. And if you combine all your super into one account, you only have one account to keep track of.

1ATO: Total lost and ATO held super as at 30 June 2024 https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/super-statistics/super-accounts-data/super-data-lost-unclaimed-multiple-accounts-and-consolidations/total-lost-fund-held-and-ato-held-super .

Source: MLC

Can I go back to work if I’ve already accessed my super?

Wed, 11 Jun 2025 04:23:00 GMT

Generally, you can, but there may be other things to consider.

When you access your super at retirement, depending on your age and personal circumstances, your super fund may ask you to sign a declaration stating you intend to never return to work again. However, there could be compelling reasons as to why you might go back in the future.

Figures from the Australian Bureau of Statistics reveal financial necessity and boredom are the most common factors prompting retirees back into full or part-time employment1. Whatever your motivations might be, if it’s something you’re considering, there are things you should be aware of.

What is your situation?

I reached my preservation age and declared retirement

If you reached your preservation age and declared you’d permanently retired, this would typically have given you unlimited access to your super.

Your intention to retire must have been genuine at the time, which is why your super fund may have asked you to sign a declaration stating your intent.

Depending on your circumstances, you also may be required to prove your intention to retire was genuine to the Australian Taxation Office.

I stopped an employment arrangement after I turned 60

From age 60, you can stop an employment arrangement and don’t have to make any declaration about your retirement or future employment intentions, while gaining full access to your super.

If you’re in this situation, as there was no requirement for you to declare your retirement permanently, you can return to work without any issues.

I’m aged 65 or older

When you turn 65, you don’t have to be retired or satisfy any special conditions to get unlimited access to your super savings, so regardless of whether you’re accessing super or not, you can return to work if you choose to.

What happens to your super if you return to work?

Regardless of which group (above) you fall into, you may have taken your super as a lump sum, income stream or potentially even a bit of both.

If you chose to withdraw a regular income stream from your super savings and are wondering whether you can continue to access these periodic payments, the answer is yes you can – and that’s irrespective of whether you return to full or part-time work.

What are the rules around future super contributions?

Unless you plan on being self employed and paying your own super, your employer is required to make super contributions to a fund on your behalf at the rate of 11.5% of your earnings.

This means you can continue to build your retirement savings via compulsory contributions paid by your employer and/or voluntary contributions you make yourself.

Note, once you reach age 75, you’re generally ineligible to make voluntary contributions (unless they’re downsizer contributions), while compulsory contributions paid by an employer under the super guarantee (if you’re an employee) can still be paid no matter how old you are.

Could returning to work affect your age pension?

If you’re receiving a full or part age pension from the Government, you’d be aware that Centrelink applies an income test and an assets test to determine how much you get paid.

Your super, as well as any new employment income will be considered as part of this assessment, so make sure you’re aware of whether earnings from returning to work could impact your age pension entitlements.

If you’re eligible, the Work Bonus scheme reduces the amount of employment income or eligible self employment income, which Centrelink applies to your rate of age pension entitlement under the income test.

Where can you go if you need a bit of help?

For information and tips around re-entering the workforce, check out the Department of Employment and Workplace Relations website, which includes a Mature Age Hub, as well as details around the government’s New Business Assistance for those looking to become self employed.

There are also websites like Older Workers and Seeking Seniors, which focus specifically on mature age candidates.

If you have further questions on how a return to work could impact you, speak to your financial adviser.

1 ABS - Retirement and Retirement Intentions, Australia

Source: AMP

Spouse super contributions – what are the benefits?

Wed, 04 Jun 2025 06:23:00 GMT

If your partner is earning a low income, working part-time, or currently unemployed, boosting their super could be a smart financial move for both of you.

When your partner isn’t earning much, or is out of work, their super might not be growing enough to support them in retirement. By contributing to their super, you may not only help them but also enjoy some tax benefits yourself.

We’ll explore how the spouse contributions tax offset works and how it differs from contribution splitting.

The spouse contributions tax offset

Are you eligible?

To be entitled to the spouse contributions tax offset:

You need to make a non-concessional contribution to your spouse’s super. This means you add money from your after-tax income and don’t claim a tax deduction for it.

You must be married or in a de facto relationship together and are not living apart or separately.
You must both be Australian residents.
Your spouse’s income should be $37,000 or less for the full tax offset, and under $40,000 for a partial tax offset.
Your spouse is under 75 years of age, and their total superannuation balance is less than the general transfer balance cap ($1,900,000 for 2024-25) as at 30 June of the prior year.

What are the financial benefits?

If eligible, you can generally make a contribution to your spouse’s super fund and claim an 18% tax offset on up to $3,000 through your tax return.

To be eligible for the maximum tax offset, which works out to be $540, you need to contribute a minimum of $3,000 and your partner’s annual income needs to be $37,000 or less. If their income exceeds $37,000, you’re still eligible for a partial offset. However, once their income reaches $40,000, you’ll no longer be eligible for any offset, but can still make contributions on their behalf.

Are there limits to what can be contributed?

You can’t contribute more than your partner’s non-concessional contributions cap, which is $120,000 per year for everyone, noting any non-concessional contributions your partner may have already made.

However, if your partner is under 75 and eligible, they (or you) may be able to make up to three years of non-concessional contributions in a single income year, under bring-forward rules, which would allow a maximum contribution of up to $360,000.

Another thing to be aware of is that non-concessional contributions can’t be made once someone’s super balance reaches $1.9 million or above as at 30 June 2024. So you won’t be able to make a spouse contribution if your partner’s balance reaches that amount. There are also restrictions on the ability to trigger bring-forward rules for certain people with large super balances (more than $1.66 million in 2024-25).

There are also different super balance limits in place if you want to take advantage of the bring-forward rules.

How contributions splitting differs

Another way to increase your partner’s super is by splitting up to 85% of your concessional super contributions with them, which you either made or received in the previous financial year. Concessional super contributions can include employer and or salary-sacrifice contributions, as well as voluntary contributions you may have claimed a tax deduction for.

What rules apply for contribution splitting?

To be eligible for contributions splitting, your partner must be between age 60 (preservation age) and 65 (and not retired).

Are there limits to how much can be contributed?

Amounts you split from your super into your partner’s super will count toward your concessional contributions cap, which is $30,000 per year for everyone.

On top of this, unused cap amounts accrued in the last 5 years can also be contributed, if they’re eligible. Note, this broadly applies to people whose total super balance was less than $500,000 on 30 June of the previous financial year.

Do all super funds allow for this type of arrangement?

You’ll need to talk to your super fund to find out whether it offers contributions splitting, and it’s also worth asking whether there are any fees.

What else you and your partner should know

If either of you exceeds super contribution caps, additional tax and penalties may apply.
The value of your partner’s investment in super, like yours, can go up and down, so before making contributions, make sure you both understand any potential risks.
The government sets rules about when you can access your super. Generally, you can access it when you’ve reached age 60 (preservation age) and retire.
While you can’t personally make further non-concessional contributions into your super once you have a total super balance of $1.9 million or above (as at 30 June of the previous financial year), it’s still possible to make contributions to your partner’s super (noting the caps).

Where to go for more information

Your circumstances will play a big part in what you both decide to do. And, as the rules around spouse contributions and contributions splitting can be complex, it’s a good idea to chat to your financial adviser to make sure the approach you and your partner take is the right one.

Source: AMP

Protect yourself: Multi-factor authentication

Wed, 04 Jun 2025 06:22:00 GMT

Multi-factor authentication (MFA) is when you use two or more different types of actions to verify your identity and you may already be using MFA. For example, when you receive an authentication code by SMS text message after entering your password to log into an online account. MFA is one of the best ways to protect against someone breaking into your account. It makes it harder for cybercriminals to take over your account, by adding extra layers of protection.

MFA requires you to use a combination of two or more of the following factors to access your accounts:

Something you know (e.g. a PIN, password or passphrase);
Something you have (e.g. a smartcard, physical token, authenticator app or SMS); and
Something you are (e.g. a fingerprint, facial recognition or iris scan).

MFA defends against the majority of password-related cyberattacks. For example, MFA protects against credential stuffing where cybercriminals use previously stolen passwords from one website and try to reuse them elsewhere so they can gain access to more accounts.

Think of adding MFA to your account like adding a house alarm that requires a PIN to deactivate. It provides you with an extra layer of protection from cybercriminals trying to break in. Even if they break through one layer (for example, by guessing your password), they still need to break a second barrier to access your account.

Having an extra step can be inconvenient at first but remember that taking shortcuts leaves your system more vulnerable. You are better off spending a few seconds entering a one-time code now, to avoid spending hours later on trying to regain access to your accounts and dealing with the consequences of your data being stolen.

MFA often goes by different names. You may see it called two-factor authentication (2FA) or two-step verification.

Options for MFA

SMS code

This is a random code that you receive to access or use an online service. For example, after you enter your username and password to log in, you will receive an SMS with a ‘one-time password’ (OTP) to enter to access your account. Another example is when you receive an SMS code when using online banking, before transferring money to a new payee for the first time.

Authenticator app

Authenticator apps are mobile applications that generate a random OTP and are more secure than receiving a code by SMS. You will first need to download an authenticator app on your device. Google Authenticator, LastPass Authenticator, Microsoft Authenticator and Authy Authenticator are a few popular ones. In the settings of your online account (e.g. your social media account), turn on MFA and select the authentication app option. This will reveal a QR code containing a unique key. Use your authenticator app to photograph this QR code or manually enter the key to link your account to the authenticator app. Once this step is done, the app will produce a new six-digit code every 30 seconds. Whenever you log in to your online account with your usual username and password, enter this code too. That’s it, MFA is on!

Biometrics

With biometrics, your unique characteristics become the authenticator. An example of biometrics is using your face or fingerprint to access your device or mobile apps. Using biometrics as MFA is convenient, because they are always with you and cannot be misplaced or forgotten.

Security key

A security key is a small physical token without a display screen, which is often plugged into your device via a USB port, or kept in close proximity for wireless versions. It prompts the user to activate authentication processes, and it is a more secure form of MFA than the other options above.

Turn on MFA

You should turn on MFA wherever possible, starting with your important accounts, such as:

User and email accounts, since a cybercriminal with access to your email accounts can reset passwords for your other accounts.
Financial services, such as your online banking.
Accounts that save or use your payment details (e.g. eBay, Amazon, PayPal).
Social media accounts (e.g. Facebook, Instagram).
Any other accounts that hold personal information (e.g. myGov).

How to turn on MFA depends on the software or service you are using; however the steps are somewhat similar for most applications. Refer here for links to the instructions on how to set up MFA for different services including user and email accounts, financial services, online shopping, social media and communication, government services and gaming.

If you don’t see your account listed, try searching online for ‘how to turn on MFA’ for that service or check the settings of your account. If your account does not have an option for MFA, you should protect it with a strong password or passphrase that is not used anywhere else.

Security tips

Although MFA improves the security of your accounts, motivated cybercriminals may persist and succeed in compromising them. To help keep your account secure, consider the following security tips:

Don’t click on account sign-in hyperlinks that you received via SMS or emails.

Scammers may impersonate your bank or a government department and trick you into clicking a link and give out information such as your account number, password or credit card numbers. If you have any doubts about a message or call, contact the organisation directly: visit the official website to find their phone number or to log in to your account via the official website. Do not use the links or contact details given to you in the message.

Don’t share MFA codes or approve unknown sign in attempts.

Requests for sign in approvals and the security codes that you receive are the system’s way of checking that you are the person who signed in. If you give someone else your MFA code or approve unknown sign in attempts, then someone else might be able to log into your account. Never approve unknown sign in attempts or share your MFA code.

Add extra layers of protection.

You should use MFA whenever possible, especially when it comes to your most sensitive data, such as your primary email, financial accounts and health data. To enhance security, your credentials must come from two different categories: for example, something you know (passphrase) and something you are (facial recognition). The more layers of security between your important information and cybercriminals, the better.

Keep up to date.

Ensure that any alternative authentication methods such as your recovery email addresses are at least as secure as the primary ones that you use to log into your accounts, and kept up to date.

Remember to transfer your authenticator when you change devices.

If you are using an authenticator app for MFA and you get a new device, make sure that you transfer it to your new device before disposing of or resetting the old one. We recommend adding a recovery method to your account and saving your backup codes in case you lose access to your authenticator app or delete it. In some cases, you might need to turn off MFA prior to getting a new device and reinstalling the authenticator app. Similarly, if you get a new phone number, make sure that before you lose access to your old phone number, you update your sign-in options for the accounts that normally rely on this number to send you an OTP by SMS.

Source: Australian Cyber Security Centre

Navigating market volatility

Wed, 04 Jun 2025 06:22:00 GMT

Financial markets have been erratic lately, understandably causing some concern for those of us with super and investments. While dips and major market events are a common feature of investing, markets generally trend upwards over time.

Most super funds invest in sharemarkets to help your money grow over in the long term. So when markets see-saw, so do super and investment balances and returns.

While this can be worrying, it’s important to remember that although the value of investments may go up and down at different times, markets tend to recover and grow over the long term. So it’s important to keep your long-term investment goals in mind.

What’s happened recently?

On 3 April, President Donald Trump announced the US would place tariffs on goods imported into the US from countries around the world. This included a 10% tariff on goods from Australia, which was the minimum rate announced on the day.

Major global economies and markets had been preparing for the announcements, but the tariffs imposed on some countries were bigger than expected. Other countries have also responded by putting similar tariffs on US goods coming into their markets.

As a result, share markets in the US and elsewhere fell sharply in the days afterwards, including the Australian Stock Exchange.

What is a tariff?

A tariff is a tax added to the cost of goods imported from a particular country or countries. It is paid to the government where the goods are being imported. Tariffs are often used to protect domestic industries by increasing the price of foreign-made competitor products, or to raise revenue.

The cost of those items to the public will generally increase by a similar amount to the tariff.

What does this mean for markets and investments?

The US tariffs are expected to slow global trade and push up the price of some things, which could cause inflation to rise.

This could result in the Reserve Bank of Australia cutting the interest rate several times this year to prevent the economy from slowing down too much.

In the short term, you may see a negative effect on the performance of investments. Short term volatility in response to political announcements and other geopolitical events is a common feature of investment markets.

While difficult to forecast, history shows us that markets do recover from disruptive influences – for example, from the Global Financial Crisis and the COVID-19 pandemic.

What led to this?

Since Trump’s second presidency began, uncertainty has emerged about US policy in the areas of tariffs, defence and other critical areas of government spending.

In recent months, shares have been quite weak, particularly US technology stocks. This group of stocks was optimistically priced after two years of strong growth, and therefore most at risk of uncertainty in the US market.

This has unsettled businesses amid concerns the US economy could slow. It has also fed into uncertainty in global investment markets, including the Australian sharemarket. 

What does this mean for me?

As global financial markets move up and down, the value and returns of your super and investments may also change in the short term.  

While this can be concerning, history shows that markets rise over time. So it’s important to keep your long-term savings and investment goals in mind and carefully consider before making any changes to your investment strategy.

It’s understandable at times like these that some members think about changing how their money is invested. As this chart shows, the long-term trend across major investment types is positive, with shares experiencing more volatility but generating higher returns than more conservative options such as cash.

While past performance is not a guarantee of future performance, historically more time invested in the sharemarket has meant a higher return on investment.

How different investment types have performed over 20 years

It’s also worth noting that investment performance has generally been strong over the past two years, meaning the value of your investments or super may have been relatively high.

Do I need to do anything?

As with any significant market event, it’s best to avoid impulse reactions, but to take a long-term view.

Source: CFS

Federal Election 2025

Wed, 04 Jun 2025 06:21:00 GMT

During the Federal Election campaign, the Government made a number of election promises, which may impact your finances. There were also a number of support measures proposed in the recent Federal Budget. What could this mean for you?

These announcements are proposals only and may or may not be made law. The information below, including the policy details and proposed start dates, is based on the information announced as at 5 May 2025. You should speak to your financial adviser to discuss how these proposals could apply to you.

Election promises

Taxation

$1,000 instant tax deduction for work-related expenses, proposed from 1 July 2026.

What’s proposed?

Taxpayers who have eligible work-related expenses may be able to claim a tax deduction of up to $1,000 without having to keep individual receipts. It will still be possible to claim work-related expenses above this limit, however evidence will be needed.

Who could benefit?

The deduction will be available to people with ‘labour income’. This doesn’t include income from running a business or from investments, where the usual rules will continue to apply.

$20,000 small business instant asset write-off extension, proposed from: 1 July 2025 to 30 June 2026.

What’s proposed?

The higher instant asset write-off threshold of $20,000, which currently applies until 30 June 2025, is proposed to be extended for another 12 months until 30 June 2026. The threshold is available for more than one asset. Eligible businesses can continue to place assets valued at $20,000 or more into a depreciation pool, where a deduction of 15% can be claimed in the first income year and 30% thereafter.

Who could benefit?

Small businesses with an aggregated annual turnover below $10 million will be able to claim an immediate tax deduction for the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2026.

Help for home buyers

Expanded ‘Help to Buy’ scheme, proposed from: to be confirmed.

What’s proposed?

The Government has proposed to expand access to the Help to Buy scheme to more home buyers by increasing the property price caps and income test thresholds, which determine eligibility to participate in the scheme.

The scheme is a shared equity scheme, which allows eligible home buyers to purchase a home with a smaller deposit, of as little as 2%. The Commonwealth will contribute up to 30% of the purchase price of an existing home and up to 40% of the purchase price of a new home.

The Help to Buy scheme is expected to open for applications later this year. Although the Federal Government has legislated the scheme, the States and Territories need to pass legislation for it to operate in each jurisdiction.

Who could benefit?

Increasing the income cap and property price caps will enable more people to participate in the scheme.

For singles, the income cap will increase from $90,000 to $100,000. For joint applicants (and single parents), the income cap will increase from $120,000 to $160,000.

The property price cap will depend on the location of the property and details can be found in the Government’s media release.

Participants must meet a number of eligibility rules and conditions, including repaying the Government when the home is sold or when certain changes occur in their circumstances. So it’s very important to understand the rights and responsibilities of participating in the scheme before making an application.

Previously announced measures

Cost of living support

The below proposals were announced by the Government in the March 2025 Federal Budget.

Energy bill relief extended for six months, proposed from: July 2025.

What’s proposed?

The Government will provide further energy rebates in addition to the bill credits people have received since July 2024. The rebate will be applied automatically to electricity bills between 1 July and 31 December 2025, in two quarterly instalments of $75.

Who could benefit?

All Australian households and eligible small businesses will receive the additional energy rebate. It’s expected the eligibility rules that apply to small businesses (quarterly power consumption) will not change.

Lower cap for PBS medicines, proposed from: January 2026.

What’s proposed?

The maximum cost of Pharmaceutical Benefits Scheme (PBS) medicines will decrease from $31.60 to $25 per script.

Who could benefit?

This will benefit people who don’t hold a concession card and would otherwise pay the maximum amount to fill a script. It doesn’t apply if the script is for a medicine not on the PBS, which may cost more than $25. Pensioners and Commonwealth concession cardholders will continue to pay the subsidised rate of $7.70 per PBS script until 1 January 2030. This is an existing measure.

Student loans to be cut by 20%, proposed from: 1 June 2025.

What’s proposed?

Student loans will be reduced by 20% before the annual indexation (at a rate of 3.2%) is applied on 1 June 2025.

Who could benefit?

The changes will benefit all people who have Higher Education Loan Program (HELP) Student Loans, VET Student Loans, Australian Apprenticeship Support Loans, Student Start-up Loans and Student Financial Supplement Scheme, based on their outstanding 1 June 2025 balance.

Importantly, voluntary loan repayments that are processed before 1 June will reduce the loan balance that’s indexed on 1 June. However, the 20% debt reduction will be applied to the 1 June balance. So if this proposal is legislated, before making a voluntary repayment, it’s worth doing the numbers to see if it’s best to make a voluntary repayment before or after the 20% reduction and indexation is applied on 1 June. The table below provides an example which shows the difference between making a $5,000 voluntary repayment before and after 1 June, where the outstanding debt balance is $30,000.

R e duced student loan repayment obligations, proposed from: 1 July 2025.

What’s proposed?

The minimum income that can be earned before student loan repayments need to be made is proposed to increase. This is in addition to the standard indexation of the income repayment thresholds which ordinarily happens on 1 July each year. Also, the way repayments are calculated will be changed.

Who could benefit?

People with student debts will benefit from lower compulsory loan repayments in 2025/26 and beyond, if their ‘repayment income’ is above the minimum threshold at which loan repayments need to be made and less than $180,000.

The minimum income threshold is $54,435 in 2024/25 and will automatically increase to $56,156 on 1 July. Also, the Government has proposed:

increasing the minimum income threshold to $67,000; and
calculating repayments on just the repayment income earned above the income threshold, not on total income.

The list of qualifying student loans is the same as those to be eligible for the 20% debt reduction on 1 June 2025 (see above).

Expanded ‘First Home Guarantee’ program, proposed from: to be confirmed.

What’s proposed?

Help will be extended to all first home buyers under the Commonwealth’s First Home Guarantee Scheme. The scheme enables home buyers to purchase their first home with as little as a 5% deposit. The Government provides a guarantee for the remaining portion of the deposit (up to 15%), to ensure the first home buyer doesn’t pay Lenders Mortgage Insurance.

Currently, income limits and property price caps apply and access is only granted to a maximum of 10,000 eligible participants each year. These requirements are proposed to be removed, opening the scheme to all first home buyers.

Who could benefit?

The extension of the scheme may help first home buyers to purchase their first home sooner. It’s important to understand that purchasing a home with a smaller deposit may increase the total interest that is paid over the life of the loan.

Superannuation

The below measure was initially announced by the Government in 2023, with support reconfirmed in the 2023 Federal Budget. Legislation was introduced to Parliament to make this change law in 2024 but lapsed when the election was called. The Government will need to reintroduce and pass legislation in Parliament before this change can take effect. Given the complexity of the policy and the number of days that Parliament may sit between now and 1 July, we don’t know if the proposed start date will change if the policy is reintroduced.

Higher taxes for balances over $3 million, proposed from: 1 July 2025.

What’s proposed?

Where people have more than $3 million in super (both accumulation and retirement values) from 1 July 2026, higher taxes are to be paid on investment earnings, with payment due in the 2027 financial year.

Currently, investment earnings within the ‘accumulation phase’ of superannuation are taxed at a maximum rate of 15%. With a ‘retirement phase income stream’, such as an account-based pension once retired, investment earnings are generally tax free.

It’s proposed that from 1 July 2025, where a person has a ‘total super balance’ exceeding $3 million at the end of the financial year, an additional tax of 15% will apply to a portion of the investment earnings. The new tax will be called ‘Division 296 tax’, as that is the name of the relevant section of tax law where the proposed rules are covered.

Additional tax won’t be paid where the total super balance is less than $3 million on 30 June 2026 (the end of the first year it will apply) or the end of any following financial year.

Where to from here?

It’s important to remember these changes need to be legislated to become law. The information above is based on the announcements made to date, and there may be changes to the start dates or other details if the policies are formalised. You should speak to a financial adviser to understand more about what has been announced and how these changes could apply to you.

Source: MLC

Estate Planning and SMSFs

Wed, 04 Jun 2025 06:20:00 GMT

One of the main reasons an individual would use an SMSF is for estate planning as it can offer greater flexibility to beneficiaries than what is available via a public offer fund. Where a member dies without a binding nomination, the distribution of the death benefits is at the discretion of the remaining trustees. This can result in some planning after the death of a member in order to achieve the optimal tax outcome. For example, one child may be still a minor and be entitled to receive the death benefits tax free. In this situation, the trustee could allocate a greater amount to that child and rely on an estate equalisation clause in the Will to ensure that the other children receive a greater share of the estate assets.

However, there are a number of traps when using an SMSF for estate planning, particularly where there are blended families. It is possible that the individual controlling the trust does not agree with the wishes of the deceased. As they have control of the fund, they can frustrate the attempts of other beneficiaries, such as children from a previous marriage to receive their inheritance, even where the trustee has agreed there is a valid binding nomination in their favour.

Nominations

SMSF members have more options when making a nomination than what is available via a public offer fund. As well as having access to non-binding, binding, non-lapsing binding and reversionary nominations, members also have the option of establishing an SMSF Will.

An SMSF Will is a collection of rules written into the governing rules of the fund’s trust deed which broadly have a similar format to a Will. These rules place an obligation on the trustee and they can be as complex as the member wishes specifying who is to benefit, any contingent beneficiaries and in what form.

It may also be possible to provide for a ‘life interest’ death benefit pension whereby one beneficiary, such as a spouse has an entitlement to the pension payments during their lifetime, but on their death, the capital would be distributed to the beneficiaries of the first deceased, such as any children from a previous marriage.

Superannuation dependants

There are three types of dependants for the purposes of death benefits being paid from a superannuation fund. They are:

SIS dependants, who can be paid directly from a superannuation fund
dependants who are entitled to take their benefit as an income stream
death benefit dependants who can receive lump sum death benefits tax-free.

If a member wants some or all of their superannuation benefits to be paid to someone other than those in the above list, they would need to have that portion paid to their legal personal representative and make a provision for that person within their Will.

All beneficiaries who are entitled to receive death benefits directly from a superannuation trustee are allowed, under superannuation legislation, to take that benefit as a lump sum. However, there are restrictions on who can receive death benefits as an income stream. While most of the dependants listed in this table can receive superannuation death benefits as an income stream, children of the deceased who are aged over 18 can only receive an income stream if they are financially dependent and under 25 or they are disabled. Where a child of the deceased receives death benefits as an income stream, the income stream must be commuted and the benefits withdrawn as a tax-free lump sum no later than their twenty-fifth birthday unless they are disabled.

As with many aspects of superannuation, the legislation specifies what is allowable, however individual funds may have more onerous rules in place documented in their trust deed.

Taxation of benefits paid to non-dependants

Where the beneficiary is not a death benefit dependant, any benefits must be taken as a lump sum and the taxable component of the benefit will be subject to tax of up to 15% plus Medicare levy on the taxed element and up to 30% plus Medicare levy on the untaxed element. While the definitions of a dependant in the SIS Act and death benefit dependants in the Tax Act are substantially the same, there is a notable difference. Adult children are SIS Act dependants and therefore, can be paid directly by the trustees of the superannuation fund, however as they are not death benefits dependants as defined in the Tax Act, the benefits will be subject to tax.

For tax purposes, the relevant beneficiary is the ultimate beneficiary. Therefore, a benefit that passes through the estate but is paid to a death benefit dependant beneficiary will be tax-free. There can be an issue where the benefits are paid to the beneficiaries via a testamentary trust. While it may be envisaged that the only persons to benefit from the fund are death benefits dependants, the trust may have potential beneficiaries that aren’t death benefit dependants in which case all benefits appropriated to the trust will be subject to tax. A possible solution is to provide in the will a superannuation benefits testamentary trust that limits beneficiaries and potential beneficiaries only to death benefit dependants.

Source: BT

Economic update May 2025

Wed, 04 Jun 2025 06:20:00 GMT

Global

Global markets whipsawed following the “Liberation Day” tariff announcements on April 2, and subsequent developments throughout the month. Volatility was rife and trading volumes were robust. The Volatility Index (VIX) spiked to a 5-year high of 57.8 on April 9, though ended the month sub-25. This move came as markets responded to several significant rollbacks of Trump’s initially absolutist tariff agenda.

Investors sold out of US assets at the beginning of the month on concerns around deglobalisation and fears that “US exceptionalism” had come to an end. This saw demand for US Treasuries (USTs) and the US dollar weaken, breaching the conventional wisdom that Treasuries and the USD should behave as safe havens during risk events. While the US Dollar Index (DXY) ended April -4.5% lower, 10y USTs recovered, closing the month near unchanged.

Global equity indices fell substantially after the initial tariff announcements and recovered almost entirely on the 90-day pause and other concessions. Despite entering correction territory early in April, the MSCI World index closed near flat.

Perhaps now the pre-eminent safe haven asset: gold, rallied nearly 10% in the first three weeks of April as investors sought an alternative to the USTs. The bullion continued to create new all time highs and briefly surpassed $3,500/oz, before paring gains into month-end.

While hard data held up on order front-loading in the US, soft data showed a deterioration in economic conditions. In March, the Global Manufacturing Purchasing Managers’ Index (PMI) retreated to 50.3 and the Services PMI increased to 52.7.

US

The S&P 500 fell just shy of entering a bear market, down nearly 19% before the tariff pause resulted in a rebound. March quarter earnings releases were overshadowed by cautions from management regarding the dampened growth outlook for 2025. The S&P 500 closed the month down -0.76%.

US Treasury prices began to trade in line with its equity counterparts, contrary to expectations. As equity markets rebounded in the back half of the month, so did Treasury prices. US Manufacturing PMI came in at 50.7, while the Services PMI dropped from 54.4 to 51.4 in March.

The US labour market added +228k jobs during March ahead of the +140k expectation, with the unemployment rate ticking up slightly to 4.2%, from 4.1% in February. Notably, federal government employment declined. Job Openings and Labor Turnover Survey (JOLTS) data showed a largely stable labour market, but a subdued hiring rate of 3.4%. The layoff rate remained consistent at 1.0%.

Core Personal Consumption Expenditures (PCE) increased +2.8% year on year during March, slightly ahead of expectations and unchanged from February.

Retail sales in March rose +1.4%, primarily due to strong auto sales. This was likely a result of frontloaded car purchases ahead of expected price increases due to tariffs. Soft data from April showed that consumer and business sentiment continued to weaken.

Existing homes sales fell -5.9% in March to 4.02m, likely due to a combination of higher mortgage rates and elevated uncertainty.

Australia

The AUD dropped below 0.60 USD post April 2 in a combination of risk-off sentiment and superannuation funds rebalancing currency hedges as their equity positions fell. The AUD recovered during the month, mostly due to weakness from the USD.

The ASX 200 followed a similar pattern to broader global equity markets during April in response to tariff headlines, however closed the month up +3.61%.

Q1 Consumer Price Index (CPI) came in at +0.9%, stronger than expectations of +0.8% off the back of higher motor vehicle prices and a greater rebound in electricity prices. Year on year CPI held steady at +2.4%. Trimmed mean inflation increased 0.7% QoQ, up from 0.5%, bringing annual inflation to +2.9%, down from 3.3% in the last quarter.

The RBA opted to leave the cash rate unchanged at 4.10%, citing concerns that inflation may not fall sustainably within the target band. The RBA opted to take a “wait and see” approach given the substantial uncertainty regarding tariffs and global trade. The market is currently pricing in a 25bps cut in May.

The unemployment rate was unchanged during March at 4.1%, with the labour force participation lower than expectations at 66.8%. The lower participation was mostly due to the impact of Cyclone Alfred. All measures of the labour market remain tight.

Retail trade was weaker than expected in Feb, up +0.2% (vs +0.3% exp.) due to a surprise decline in household goods.

New Zealand

The RBNZ cut rates by 25bps to 3.50% in early April and advised that “the Committee has scope to lower the Official Cash Rate (OCR) further as appropriate”.

Q1 CPI was up by +0.9%, slightly stronger than the +0.8% consensus expectations, bolstered unexpectedly by higher education fees (+8.9%). This was due to a +23% increase in tertiary and other post-school related education costs. Services inflation increased by +0.7% in Q1.

Europe

The ECB cut interest rates by 25bps for the second meeting in a row in April, bringing the cash rate to 2.25%. The Governing Council advised that the current climate is one of “exceptional uncertainty” and that it will assess further rate cuts on a meeting by meeting basis.

The STOXX 600 declined -1.21% throughout the month, selling off in line with other global equities, before a shallow recovery.

The Sterling gained over +3.5% during April, close to its highest level in over three years against the USD, following the sharp selloff in the greenback. However, the Sterling continued to underperform the Euro. The Euro saw its largest monthly gain against the Dollar in nearly 15 years, ending the month buying 1.1328 USD.

European Union annual inflation slowed to +2.2% in March, in line with expectations.

China

China announced a slew of retaliatory tariffs against the US, landing at 125% before both companies implemented a 90-day pause.

The April Politburo meeting saw the Politburo pledge to step up the implementation of more proactive macro policies, vowing to offset external uncertainty with the certainty of high quality development.

GDP growth exceeded expectations at +5.4% year on year in Q1, vs +5.2% estimates ahead of US tariffs.

Manufacturing PMI slipped into contraction for the first time in three months, coming in a 49.0, below expectations of 49.7 and at its lowest level in 16 months. This was mainly due to a pullback in export orders. Non manufacturing PMI dropped to 50.4, below expectations of 50.6.

Australian dollar

After advancing +2.5% against the USD in April, the AUD ended the month at 0.6402, posting its second consecutive month of gains against the greenback.

Post April 2, the AUD declined against the USD due to a decline in risk sentiment and superannuation funds trimming hedging positions as global equities declined. This saw the AUD depreciated -5.8% on the week.

The AUD saw gains for the rest of the month following the announcement of the 90-day tariff pause and as US assets were sold off across the board, mechanically supporting the AUD.

While the AUD experienced a similar selloff against the EUR as superannuation funds rebalanced portfolios, it experienced a far shallower recovery. The AUD ended the month down -2.15% against the EUR.

Australian equities

The ASX200 ended April +3.6% higher than it begun, with all Global Industry Classification Standard (GICS) sector groups firmly in positive territory, with the only exception being Energy.

Trading volumes were robust following President Trump’s “Liberation Day” as the market sought to identify the relative winners and losers of the shifting trade and geopolitical set up.

The energy sector declined -7.7% over the course of April as oil saw its largest monthly decline in nearly 3.5 years. The oil price decline came as Saudi Arabia indicated that it would expand its production and as the global trade war dampened the outlook for fuel demand. Index heavyweights WDS and STO fell -10.3% and -9.8% respectively.

Meanwhile, uranium miners BOE, PDN and DYL advanced +27.8%, +14.7% and +7.1% respectively. The gains followed an extended period of underperformance off the back of a lower Uranium spot price, as well as abating tariff concerns and positive production updates from both BOE and PDN.

Gold stocks rallied as the spot price of gold continued to reach record highs, peaking just above US $3500/oz. While EVN and NEM provided positive quarterly updates to the market in April, NST observed a weaker March Quarter and downgraded its FY25 guidance at its earnings update. Despite this, EVN (+10.1%), NEM (+6.4%) and NST (+4.5%) all ended April higher.

The financials sector saw a 5.6% gain on aggregate, with banks seemingly considered relative safe havens given their strong domestic focus and robust balance sheets. CBA, the largest company in the index, rallied +10.4% over the month. The stock is now trading +45% higher than this time last year. Other major banks also observed gains in April; NAB +6.2%, WBC +4.0%, ANZ +2.7%.

Macquarie Group, on the other hand, ended the month -1.6% lower. The stock fell as much as -16.4% following Liberation Day, though pared losses over the remainder of the month. On April 22, the company announced that it would be selling its North American and European public investments business to Nomura for A$2.8bn; a deal which would see A$285bn of Assets Under Management (AUM) across equities, fixed income and multi-asset move to the Japanese bank. In the days following this announcement, the stock advanced ~8%.

JHX extended last month’s sell off, down -3.9%. Twenty-one investors wrote an open letter to the ASX requesting that investors be allowed to vote on whether the company could move its primary listing to the US. In response, JHX released a letter to shareholders advising that it would not move its primary listing without a shareholder vote.

Global equities

The S&P500 ended April down -0.8%, its third consecutive monthly decline. The Dow Jones declined -3.2%, while the tech heavy NASDAQ rallied +1.5%. Though the S&P sold off more than -10% in the days following Liberation Day, it progressively recovered as various exclusions were announced and a 90-day pause was implemented. The market also begun to digest various Q1 earning releases and guidance updates from corporate America.
C-suites were given their first proper opportunity to provide the market with some tariff context.

The tech sector and consumer staples sectors outperformed the broader market, with the GICS sector groups advancing +1.6% and +1.1% respectively. Meanwhile, amid an -18% decline in the World Trade Index (WTI) and a -15% fall in Brent, the energy sector lagged (-13.7%).

Similar to other global markets, European equities fell post April 2, then stabilised as the Trump administration showed signs of moderating its stance on tariffs, however EPS downgrades continue to accelerate. The FTSE100 and Stoxx600 ended the month down just over -1% a piece.

Asian equity markets were mixed during April, with Singapore, Hong Kong, China and Taiwan indices posting losses greater than 2%, while Korea and Japan saw gains of 3.0% and 1.2% respectively. The MSCI Asia Pacific Index moved similarly to the Australian market and other global peers, whipsawing around tariff announcements from the White House, before steadily increasing for the remainder of the month to finish up +2.6%.

Property securities

While tariff news continued to be the key talking point, Global property securities saw a decent April performance up 0.9% in the month, after a weaker March (-2.0%).

The Americas region was the worst performer in April down 2.2%, erasing YTD gains, primarily on stagflation concerns in the US.

Europe/UK on the other hand had an extremely strong April +10.3%, potentially reflecting investors looking for alternatives and the UK/European Real Estate Investment Trusts (REITs) being too cheap to begin with despite a resilient rental backdrop.

The Asia Pacific region also had a strong month of performance, up 4.5% potentially benefitting from lower rates and limited growth downside expectations from tariffs.

Locally, Australian Real Estate Investment Trusts (AREITs) had a strong month too up ~6% on lower rate expectations following tariffs.

Fixed Income and Credit

The US bond market was in the spotlight throughout April. US fixed income began to sell off despite risk-off sentiment during the early stage of the month, demonstrating a positive correlation to equities. This was quite surprising and opposed to traditional 60:40 portfolio playbooks. However, this was due to uncertainty induced deleveraging across the investor spectrum. Of course, there is substantial leverage underpinning the US treasury market.

Demand for 10y USTs weakened, calling its status as a safe haven asset into question, with yields rising to over 4.5%. Despite this volatility, the yield recovered to end the month only -4bps lower than it begun.

The 2y USTs yield ended the month -28bps lower, as the market priced in additional rate cuts from the Fed due to increased economic uncertainty and a softer growth outlook.

The AU bond market is pricing in a 2025 cash rate of between 2.85% - 2.90%, representing 4-5 rate cuts by year-end.

The 10y AU Government bond yield trended lower throughout the month, after a U shaped sell off and recovery around tariff news at the beginning of April.

US investment grade credit spreads widened significantly after “Liberation Day” before tightening slightly after the 90-day pause was announced. Spreads remained wider for the rest of the month, closing 5.7bps wider. HY (High Yield) spreads followed the same pattern, finishing April 31.2bps wider.

Source: First Sentier Investors, May 2025

Am I too old to get a home loan?

Wed, 04 Jun 2025 06:18:00 GMT

One of a property lender’s most important jobs is to make sure a borrower can manage the typical home loan term of 30 years. This becomes even more critical from the age of 50 because that 30-year term can see a borrower well into retirement.

We have a retirement age in this country of 67, and yes, a lot of people work past that.

But the banks want to make sure that, when someone does retire, they can meet that mortgage and they’ve still got somewhere to live.

Lenders are obligated to assess whether a loan will place you in financial difficulty.

Is there a home loan age limit in Australia?

It’s clear that a lender can’t refuse a loan application purely based on age.

Federal government legislation like the Age Discrimination Act prevents such blatant bias. However, under the “responsible lending” laws, a lender must ensure that every home loan application it approves makes sense and doesn’t place borrowers in any financial difficulty.

The legislation is there to protect the client – to make sure that the client is always protected in any situation, whether it’s age or not. So, what can older borrowers do to increase their chances of a successful application?

Tips for older borrowers applying for a loan

While you're never too old to get a home loan, you can take these extra steps to put your best foot forward.

Keep your credit score high

Lenders use your credit score or rating, together with their own risk criteria, to decide if you’re a safe bet. According to moneysmart.gov.au, your credit score is based on personal and financial information about you that’s kept in your credit report. This will include the amount of money you’ve borrowed, the number of credit applications you’ve made and whether you pay on time.

Credit cards, utility bills and personal loans all come into play, as do any bankruptcies or debt agreements, court judgments, or personal insolvency agreements.

It could be worth engaging a broker before you approach any lenders. Potential borrowers are also warned about buy now, pay later schemes, which count towards your tally of credit applications.

What they’re saying to you is you can buy this now, but you’ll make the repayments over four weekly payments or eight weekly payments, so they’re actually doing a credit hit and can have quite a big impact on your file.

If you plan to shop around for a home loan, it can work in your favour to engage a mortgage broker. Do the research first before you apply with a lender so that you don’t have any unnecessary credit hits.

Plan your exit strategies

Lenders need to have a clear understanding of your exit strategy if the term of your loan extends beyond retirement age.

A 49-year-old loan applicant who plans to retire at 67, which leaves them 18 years to make repayments using a regular income.

A broker or lender will calculate the loan balance at 67, then do a conservative calculation of the value of any assets and your likely super balance to help determine if there will be adequate funds to continue to service a mortgage in retirement or to pay out the loan.

Downsizing is one common exit strategy for older borrowers in Australia. A plan to transition from a larger to a smaller home is another common exit strategy.

When you retire, you could downsize. The amortised loan is paid down and the house that they’re selling has gone up in value. So they could have enough to go and buy a property unencumbered and still have their super to retire on.

It’s in everyone’s interests to ensure a borrower is protected. It all still comes back to responsible lending … making sure the client has got income and equity, a good credit score.

The majority of lenders assess on an individual situation, but obviously do more checks and balances when someone is a bit older to make sure they are looked after for the whole journey.

Case study

Having relocated to Australia and built up equity in his home, a 54-year-old male was looking to refinance and consolidate his debt. He felt confident about making repayments for the foreseeable future and had post retirement plans to downsize and put his super into play.

The first lender approached wasn’t comfortable with his exit strategy.

It was marginal because the bank didn’t feel the exit strategy was strong enough, based on the fact they had a requirement to have a minimum amount of super.

Sometimes lenders have limits on certain types of borrowers – many factors influence home loan approval.

Having completed all the requisite checks, the setback was surprising and disappointing but sometimes a lender hits a limit on a particular type of borrower, such as when investment lending came under the spotlight in 2021.

Fortunately, the second lender quickly approved the loan. They would accept the downsizing and the super position, and they could clearly see that the client had so much equity in their home as well, and that they would be able to pay that debt down.

Source: Domain

The absurdity and calamity of US tariff policies

Thu, 15 May 2025 05:13:00 GMT

US tariffs are poorly designed, badly implemented and are already damaging both the US and global economies. The economic damage will only get worse as uncertainty further undermines business and consumer confidence and results in dislocation of global supply chains.

Determining the extent of economic damage, and financial market implications, is difficult because we don't know what tariffs will actually be implemented or how many backflips there are before then. There’s no clear, defining strategy. The justification for tariffs oscillates between reinvigorating US manufacturing, raising revenue to fund tax cuts, the cost of the US providing global security, the provision of the US dollar to support global trade and financial markets, and broadly addressing an 'unfair' trading system. Different justifications would lead to different structures of the tariff regime. Adding to uncertainty, key individuals in the administration have different goals for tariffs.

1. The obsession with bilateral trade deficits is baseless

President Trump's tariff obsession is rooted in a dislike of trade deficits. The United States has run a trade deficit since the mid-1970s (Figure 1). He attributes this deficit to unfair trade policies in other countries and an overvalued US dollar, resulting from US dollar demand given its role in international trade and finance. But the trade deficit also depends on US domestic conditions, notably the US Government's huge fiscal deficit, currently 5% of GDP.

Balanced national trade doesn't need bilateral balanced trade

Even if balanced trade at the country level was desirable, there is no reason for this to apply country by country. Even countries with balanced aggregate trade run large trade deficits or surpluses with almost all of their trading partners: Belgium had balanced trade with just two countries; and Canada, Finland, South Korea and South Africa each had balanced trade with just one of their trading partners. Each of these five countries had significant bilateral trade surpluses or deficits with over 150 of their trading partners. The US goal of balanced bilateral trade with every country is, frankly, bonkers.

2. The calculation of tariff rates is absurd

Bilateral trade balances are meaningless but determine the US 'reciprocal tariffs' (Figure 2).
Even countries the US has a trade surplus with, including Australia get a 10% tariff. If Australia applied the same logic as the US, we’d impose a tariff on the US of around 50%.
The US has a surplus in services trade of 0.25% of GDP (partly offsetting the goods trade deficit of 1% of GDP; Figure 1) but ignores services trade in its calculation of tariffs.

3. The tariffs are badly designed reflecting unclear and inconsistent goals

The US tariff regime has a mix of tariffs on specific goods (steel, aluminium, vehicles) and on specific countries (Canada, Mexico, China and the reciprocal tariffs) reflecting the varied goals of the tariffs. But many of these goals are in conflict. If, as Trump claims, tariffs raise revenue without increasing US prices by forcing foreign suppliers to absorb the tariff, then US manufacturers won't be more competitive as US prices won't be higher. And if tariffs are successful in boosting US production, then there would be fewer imports, and so less tariff revenue.

Several bad design elements of the tariffs mean there will be further changes:

Different tariff rates distort trade for little benefit – for example, Apple intends to ship iPhones to the US from India rather than China as US produced iPhones would be prohibitively expensive.
High tariffs are being applied to goods the US can't, or won't, ever produce – for example, some minerals and shoes (most come from China and Vietnam with 145% and 46% tariffs).
Tariffs are being applied to inputs used by US manufacturers, increasing exporters’ costs.

4. The effective trade embargo with China will be disruptive to the US economy

The 145% punitive tariff applied to China makes most imports from China prohibitively expensive. But the US economy is not ready to disengage from China, which has supplied 13% of US imports. Factories don't pop up overnight.

Using a fine disaggregation, breaking down goods into their constituent parts, over half of US imports are from China. Alternative suppliers just don't exist.

For finished consumer goods with very high import shares from China, large price increases and stock shortages will be disruptive to consumers and impact consumer sentiment and support for tariffs. The economic impact will be even greater for those imports predominantly sourced from China that are used as inputs in US production, such as explosives, machinery and various chemicals. For example, China is also a key source for base ingredients used in manufacturing medicines and finished medicines.

5. The tariff regime won't survive its poor design, but tariffs won't go away completely

The US tariff regime is already unravelling with holes poked in the tariff wall.

Reciprocal tariffs were paused until 9 July (the baseline 10% tariff still applies to all countries).
Consumer frustration will mount facing higher prices and product shortages. For example, phones, computers and some other electronics have been exempted from the China tariffs.
Businesses are getting traction lobbying on the cost to production from tariffs, for example there will be a partial rebate on the 25% tariffs on car parts used as inputs in US manufacturing.
The US has said some 70 countries want to negotiate tariff reductions. Yet negotiating a detailed trade agreement takes time. The renegotiation of the US-Canada-Mexico trade agreement in President Trump's first term took 18 months. A rushed negotiation will contain flaws.

However, President Trump strongly believes in the benefits of tariffs for promoting US manufacturing and he needs the revenue. He has committed to using tariffs to reduce income taxes, even musing that income taxes could be eradicated. But a 10% uniform tariff has been estimated to raise just $1.7 trillion over 10 years, a 20% tariff $2.6 trillion. This is substantially less than the estimated cost of $5 to 11 trillion of the tax cuts already promised by President Trump.

6. What does the future hold?

There will be many more turns in the road with backflips, reduced tariffs for goods the US won't produce or needs and new tariffs. There will be 'deals' reducing (but not eliminating) individual tariffs with countries committing to reduce trade barriers and import US goods (much of which will never happen).

The pause in reciprocal tariffs, after just one week, was reportedly triggered by the turmoil in bond markets which could have precipitated a financial crisis. Trump has displayed greater resolve in the face of the large fall in equity prices than in his first term. But the risk of a financial crisis, or severe recession, and sharp falls in approval ratings are likely to remain red lines that would result in some pullback.

Challenger expects ongoing tariff uncertainty and hence further volatility in markets. Aggregate tariffs will never get to the levels initially announced, but they will also be much higher than before, reducing US and global growth. Tariffs will add to US inflation, reducing the ability of the Fed to ease. Market pricing is for almost 100 basis points of cuts this year, but there's a good chance the Fed does not even cut this year.

Australia will also see slower growth. We have limited direct exposure to the US economy, but our largest trading partners are more exposed (Table 1). The IMF downgraded its GDP growth forecasts for 2025 by 0.5%. Slower growth, and China's surplus manufacturing capacity reducing Australian import prices, will lower inflation opening the path to RBA rate cuts. However, market pricing for a cash rate below 3% by December is overdone. With the worst case for US tariffs unlikely to play out, three cuts bringing the cash rate to 3.35%, around its neutral level, seems more likely.

Source: Challenger

How to grow your super before retirement

Mon, 24 Mar 2025 23:03:00 GMT

A super balance of $1 million is often presented as the magic number for a comfortable retirement. But most experts say it depends on your lifestyle and retirement expectations. Variables include whether you own your own home outright, your health and dependents who need or may need your financial assistance. The size of your retirement nest egg will be determined by your individual goals and circumstances. But there are a number of practical strategies you can use to boost your super before retirement:

Delaying retirement : For the 2024-25 financial year, employers are required to contribute 11.5% of your salary to your super account. This is known as the superannuation guarantee (SG) contribution. Postponing retirement, to work a little longer, or continuing to work at reduced hours, can help with financial security by receiving further employer contributions to your superannuation.
Consider salary sacrificing : Salary sacrificing can be an effective strategy to boost your superannuation savings. It allows you to arrange with your employer to make additional before-tax contributions to your super account, which are taxed at a flat rate of 15%. These contributions are included in the concessional (before-tax) contribution cap, which is currently set at $30,000 per annum and includes employer contributions such as superannuation guarantee contributions, as well as personal contributions for which you claim a tax deduction.
Make after-tax contributions: After-tax contributions can be an effective way to boost your super. These contributions are made from your after-tax income and are included in the non-concessional (after-tax) contributions cap. The current cap is $120,000 per annum. You may be able to bring forward up to three years of after-tax contributions, depending on your total super balance and age.
Spouse contributions: If your spouse is a low income earner (earning up to $40,000 per year), you can make super contributions on their behalf and claim a tax offset of up to $540 per annum. This tax offset is calculated as 18% of the contributions made. To be eligible, you must be married or in a de facto relationship with your partner and both of you must be Australian residents.
Government co-contribution: If you earn less than $60,400 per year and make after-tax super contributions, you may be eligible for a government co-contribution of up to $500 per year. This co-contribution is paid directly into your super account after you've lodged your tax return for the year.

Using these strategies can help you maximise your super and retire comfortably. However, as a general starting point, you can use the Money Smart calculator to work out:

How long your account-based pension will last?
How investment returns will affect your pension balance?

Source: Perpetual

Caring for ageing parents

Mon, 24 Mar 2025 23:01:00 GMT

Some of us may help provide assistance to our ageing parents or other relatives in the future. That time may bring a range of emotional and physical challenges. Planning ahead may help relieve stress down the track. Here are three suggestions that may make a difference.

Talk about your parents’ future

It may not be an easy discussion, but knowing what your parents want can help later. Ask them about the type of care and living arrangements they want. Find out about the different types of care they can afford. Think through whether you will be able to physically and mentally offer the support they require. This is an important but often overlooked consideration.

It also helps to establish trigger points. Being unable to manage a garden or a dementia diagnosis and clear signs of memory loss may be time to change care arrangements. This process is about helping your parents to state their wishes while they still can. They can also take this information to specialists, such as their financial advisers, accountants and lawyers. Knowing this information can also help you plan ahead if you need to offer financial support.

Setting up a power of attorney and enduring guardianship

You never know what circumstances life may send your parents’ way that mean someone else needs to take care of them or their finances. At some point, some of us might not be able to go to a bank or make an informed decision about our care. Which is why appointing a power of attorney and setting up enduring guardianship documents can be important.

This is a trust relationship, and your relatives should carefully consider the right person to appoint. It’s also important not to leave this until it's too late. It’s difficult for someone suffering from mental deterioration to provide informed consent about changes to their finances. Setting up these documents before problems arise can protect ageing relatives and their families.

Establishing clear records of finances and assets

Finances and assets are a sensitive topic, which could be tough to discuss. This is understandable, but you can still help them plan by encouraging them to set up clear records of what assets or debts they have, as well as contact details for institutions they use along with details about any financial advisers, accountants, lawyers and other specialists with which they have relationships.

Having clear documentation can also help down the track. For example, it can ensure any debts are attended to and avoid unexpected debt collection notices for bills that would have been covered at the repayment time if you’d known about it. Or it can help to identify funds to cover medical expenses or nursing care when needed.

Being prepared can offer you and your relative's confidence about their options for whatever the future brings, even if it feels confronting at first. It can also make difficult times a little less challenging. There is a range of tools offered by state trustees and government websites like MoneySmart to help with budgeting and estate planning. Speaking to financial advisers and lawyers can also help.

Source: BT

When can you access your super?

Mon, 24 Mar 2025 22:59:00 GMT

Super is only for when you retire, right? Well not quite. There are a few times in life when you might have a valid reason to get hold of some of your super savings.

When is it time to access your super?

Super is your savings for retirement. So it makes sense that there is an age you have to reach to get access to the funds you’ve saved. When you reach what we call your preservation age, you can access your super if you permanently retire. From 1 July 2024 this is age 60 for everyone.

So you’re old enough, now what?

Once you’ve celebrated your 60th birthday, there’s another box to tick before you get access to your super. We call this a condition of release and leaving the workforce for good is one of these conditions. So if you retire for good after reaching your preservation age, you can get your hands on your super. If you change jobs on or after turning 60, you can continue to work and also access your super. Or you can wait until you reach age 65 and access your super, even if you’re still working. If you become totally and permanently disabled before your preservation age, you’ll also be able to access your super.

Can you access your super before age 60?

Yes. But the Federal Government has very strict guidelines on when and why you can access you super early. There are some other circumstances where you can apply to the Australian Tax Office to access a limited amount under compassionate grounds from your super before retirement, when you are in need of financial help to:

Stop you from losing a home you own because you can’t pay the mortgage.
Cover the cost of medical treatment, palliative care and/or disability services for you or a dependent.
Cover the cost of a funeral or burial arrangements for a dependent.
You can also apply to your super fund for early access if you:
Are experiencing severe financial hardship, can’t pay basic expenses for you and your family and have been paid income support benefits like JobSeeker continuously for at least 26 weeks.
Have a terminal illness.
Become incapacitated, either, temporarily or permanently.

Is it a problem to access super early?

Any amount you take from super now is less money for when you retire. Of course, if being short of money is forcing hardship and stress on you now, and you have a legitimate reason to access your super, withdrawing an amount to take the pressure off makes sense. But it’s a good idea to get information on your other options before taking this step.

I really access my super to pay my first home deposit?

Yes you can. The First Home Super Saver Scheme (FHSSS) could see you on your way to owning your first home sooner:

You can only access any extra payments you have made into super for the purpose of saving for a home loan – and also investment returns those extra savings have created.
You can keep these payments in super until you’re ready to buy.
While you do this you can be saving on tax – both on the money you’re earning from investing your super savings, which is taxed within super at 15% and from the tax you could save by making extra payments into super from your pre-tax salary – these are called concessional or salary sacrificed contributions.
Regular payments into super help you save.
Your super may earn better returns than a bank account.

Source: MLC

The $3 billion money pot a million retirees mistakenly ignore

Mon, 24 Mar 2025 22:56:00 GMT

One in four retirees could be thousands of dollars a year further ahead just by claiming one or more key government entitlements as soon as they’re eligible. Are you missing out?

Australia’s retirees are missing out on about $3 billion a year in money that could be used to pay essential living expenses -- often because they wrongly assume they’re not entitled to it, according to research from Retirement Essentials^. Approximately one quarter of Australia’s 4.1 million retirees apply late or completely miss out on claiming benefits designed to help offset the cost of living. They could be thousands of dollars a year better off just by asking if they’re eligible for one or more of the following government benefits:

Age Pension
Commonwealth Rent Assistance
Pensioner Concession Card
Commonwealth Seniors Health Card
Government energy bill rebates.

One third of all recipients apply for the Age Pension at least a year later than they could have, the Retirement Essentials research showed – and for 16%, the delay is more than three years. Late applications for the Age Pension, Commonwealth Rent Assistance and the Pension Concession Card together resulted in an average cost of $16,800 in lost entitlements per person over 12 months, totalling about $3 billion, the research found.

In addition, about a million Australians aged over 67 fail to claim the Commonwealth Seniors Health Card – which is worth an average of $3,000 a year in reduced health and medical costs**. The vast majority of them would be entitled to it, Retirement Essentials found. Government utility bill rebates are also under claimed, according to research from the Melbourne Institute and Roy Morgan. It found two in three concession card holders did not apply for energy bill discounts#, with most of those unaware they might be eligible.

Why do retirees delay applying for key benefits?

People are often late to apply for key benefits because they wrongly assume they’re not entitled to those benefits. The average delay in applying for the Age Pension alone is 1.1 years, data from Retirement Essentials shows. Reasons for this include:

They don’t provide the necessary paperwork.
They mistakenly believe missed payments will be backdated.
They wrongly assume they need to spend their savings before applying.
They wrongly believe they can’t apply if their partner is still working.
They mistakenly assume they can’t apply if their partner is not yet of Age Pension age.
They are reluctant to rely on government support.
They fall through the net for other reasons.

Benefits help to offset the cost of living

Retirees could be utilising one or more unclaimed government benefits to ease cost pressures, with the cost of living named the number one concern for Australians, according to the 2025 Colonial First State Rethinking Retirement report. While retirees have been feeling the pinch from rising inflation in recent years, data from the Association of Superannuation Funds of Australia released in December* found there was some good news last year, with cost pressures easing slightly in the September quarter.

Couples aged around 65 who own their own home now need $73,031 annually to achieve a comfortable retirement, while singles need $51,814, according to ASFA’s Retirement Standard. This equates to $595,000 in superannuation savings for a single homeowner retiring at age 67, and $690,000 for a couple. A modest retirement budget for homeowners would require $47,475 a year for couples and $32,930 for singles annually. This equates to requiring $100,000 in super at age 67 together with Age Pension support.

Complex range of rebates available for older Australians

There are a range of payments, rebates and concessions available from Commonwealth, state and local governments and private companies designed to offset costs for Age Pension recipients and seniors.

Government benefits include utility and rate bill rebates, and transport and travel benefits. Private companies also offer a range of other discounts to holders of state-based Seniors Card holders.

^ Research on the cost of late applications for the Age Pension and related government benefits from Retirement Essentials and Link Advice, 2024.

** Research on Commonwealth Seniors Health Card uptake from Retirement Essentials, 2025.

# Research on energy concession awareness among concession card holders from the Melbourne Institute and Roy Morgan commissioned by The Energy Charter, June 2024.

^^ CFS research, for which 2,250 Australians were surveyed in 2024 on their attitudes towards retirement.

* Association of Superannuation Funds of Australia (ASFA) Retirement Standard, 12 months to September 30, 2024.

Source: Colonial First State