The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen MP, today reminded Australians of the considerable strengths of the nation's superannuation system and encouraged young people in particular to take a more active interest in their superannuation fund accounts.
While the 2008-09 financial year results across different super funds with a balanced growth option are showing returns of -13%, the last three months have seen positive returns, showing a turn around of 5% growth.
"The Government recognises that for many Australians their superannuation savings will form a significant part of their retirement income," Mr Bowen said.
"While in the last year or two, global economic conditions have had a significant impact on superannuation investment returns, particularly for those nearing retirement, it is important to remember that over the past 35 years the average Australian superannuation fund has delivered real returns of around four per cent over and above inflation."
The recent turmoil in international financial markets has affected the Australian stock market and, with a substantial proportion of superannuation assets invested in shares and other growth assets, is affecting superannuation fund returns. However, superannuation is a long-term investment designed to provide solid returns over an individuals working life and years in retirement.
"The long-term nature of superannuation allows superannuation fund trustees to manage market volatility over time through a progressive rebalancing of their investment strategies in response to market conditions," Mr Bowen said.
"Australians can quite rightly have confidence in our superannuation system and in the Government's actions to further strengthen it in the short-term and into the future."
Minimum draw-down relief for account based pensions
In the 2009-10 Budget, the Government announced that it would reduce the minimum payment amounts for account-based pensions by 50 per cent for 2009-10. Regulations giving effect to this change have now been made. This measure extends the pension drawdown relief which the Government provided earlier this year in respect of 2008-09.
Extending the drawdown relief for account-based pensions will reduce the need for retirees to sell assets at a loss in order to meet the minimum payment requirement for 2009-10. This will assist retirees to recoup capital losses on their pension portfolios as markets recover.
Capital Gains Tax roll-over relief for merging superannuation funds
The Government has also provided roll-over relief for capital losses and the transfer of revenue losses arising on the merger of a complying superannuation fund with another complying superannuation fund with at least five members. The measure will also allow the transfer of previously realised capital losses and revenue losses from the original fund to the continuing fund. The measure will preserve the offsetting value of the losses, thereby removing a potential barrier to superannuation fund consolidation and will be available for mergers occurring on or after 24 December 2008 and before 1 July 2011.
Superannuation fund mergers can drive down operating costs by increasing economies of scale, resulting in lower fees to members.
Cooper review into the governance, efficiency, structure and operation of Australia's superannuation system
The Government has established a review into the governance, efficiency, structure and operation of Australia's superannuation system.
A panel of experts will conduct the review, led by full-time Chair Mr Jeremy Cooper, who has moved from his former role as Deputy Chairperson of the Australian Securities and Investments Commission.
The review will consider how to maximise retirement income for Australians, including through increasing efficiencies, reducing costs and fees and lifting long-term rates of return.
Details of the review, including the terms of reference, are available at www.supersystemreview.gov.au.
Australia's future tax system (AFTS) review
In the 2008-09 Budget, the Treasurer commissioned the AFTS review to examine Australia's taxation system and make recommendations to create a tax structure that will position Australia to deal with the demographic, economic, environmental and social challenges of the 21st century and enhance Australia's economic and social outcomes.
At the request of the Treasurer, the review brought forward its consideration of the retirement income system. A copy of the review's advance report is available at www.taxreview.treasury.gov.au.
The review will provide its final report to the Treasurer by the end of 2009.
27 July 2009