Why you SHOULDN’T worry about your super being wiped out by the worsening share market plunge
- Superannuation funds expected to take biggest hit since Global Financial Crisis
- Losses have been forecast for the funds for only the fifth time in three decades
- Downturn comes after $270 billion was wiped off the Australian stock market
Australians have been urged to remain calm as superannuation funds are expected to take their biggest hit since the Global Financial Crisis.
Superannuation funds are set to plunge this financial year making it only the fifth time in three decades that losses have been recorded.
The downturn is blamed on a massive fall in the Australian stock market with about $270 billion wiped off the ASX.
Independent financial advisor Nick Bruining reassured workers and retirees that their superannuation would bounce back over time.
Retirees have been urged to remain calm as superannuation funds are expected to take their biggest hit since the Global Financial Crisis (stock image)
‘While the value of the shares may have fallen, the quality hasn’t. And, eventually, values will come back up to reflect the quality of the assets,’ he told ABC.
AustralianSuper, the largest pension fund in the country, had a return of -4.2 per cent as of Thursday and the rate could stay in the negative for the rest of the financial year for the first time since the Global Financial Crisis.
WA Self Funded Retirees president Ron de Grunchy said the losses were not a ‘major catastrophe’ and the stock market was still strong.
‘Woolies shops are still open for business, BHP still has its iron ore reserves in the ground, the quality is still there and ultimately the price will reflect the quality,’ he said.
More losses could be on the way for the ASX amid rising fears the US is headed towards a recession that could have dire repercussions on the global economy.
Anthony Albanese’s government is plotting a radical change to superannuation that would give every Australia a much bigger nest egg when they retire.
The downturn has been blamed on a massive fall in the Australian stock market with around $270billion wiped off the ASX (stock image)
Labor wants to raise employer’s compulsory contributions from 10 per cent to 15 per cent, giving a worker on $90,000 a year an extra $174,016 when they retire.
The Coalition government under Scott Morrison raised it to 12 per cent by 2025, but Labor campaigned on a commitment to boost it beyond that.
‘We’re focused on 12 but the longer-term objective is 12 to 15,’ Financial Services Minister Stephen Jones told Daily Mail Australia last year.
Mr Jones confirmed the government would raise the superannuation rate to 15 per cent.
However, he said when and how that milestone was achieved needed to be investigated over the next few years.
‘We’ll look at the pathways beyond 12 per cent towards the backend of this term, but there’s no present plans for that,’ Mr Jones told the Australian Financial Review.
Anthony Albanese’s (pictured) government is plotting a radical change to superannuation that would give every Australia a much bigger nest egg when they retire
Mr Jones said he wanted to ‘bed in what we’ve got in place and look at the circumstances as we approach the end of this term for where we might go for some of those more aspirational things’.
Raising super to 15 per cent would boost monthly compulsory contributions from $437 to $625 for a worker earning $50,000, giving them more than $100,000 more in their account by retirement over 42 years.
At the other end of the scale, monthly additions would rise from $1,312 to $1,875 for those on $150,000, increasing nest eggs from $1,170,333 to $1,496,613.
‘It’s clear that the super guarantee rise puts Australians firmly on track to achieve the dignified retirements they deserve,’ Association of Superannuation Funds of Australia deputy chief executive and chief policy officer Glen McCrea said.