Crystal Ball Part Of New Super Rules
The Age
Tuesday May 20, 2008
SUPERANNUATION funds will have to tell members how much they are projected to have in their accounts when they hit retirement age under changes to disclosure rules.
Under the rules, funds will have to express future earnings in today's dollars.The change is designed to give fund members a better understanding of whether they will have enough superannuation."The Australian system is now overwhelmingly defined contribution in nature," Superannuation Minister Nick Sherry said yesterday. "One of the significant shortcomings of such an approach is that very few fund members have any idea what they are likely to end up with in savings at likely retirement age."The change brings Australia closer to foreign systems including Britain and Sweden, where superannuation fund members are given an estimate of incomes before the age at which they can access state pensions.Funds will also be required to use a standardised formula and assumptions in their virtual calculators to allow fund members to see the impact of different contributions, rates of return and fees and charges.Speaking at the Institute of Actuaries of Australia annual conference, Senator Sherry said the "universal forecasting" would lead to a greater emphasis on long-term fund performance.The changes were welcomed by the Association of Superannuation Funds of Australia. A spokesman for the industry body said forecasting tools would "allow fund members to better engage with their super".Senator Sherry also gave a further indication that rules for self-managed superannuation funds were likely to be tightened, although he shied away from any specific proposals."I am particularly concerned about cases where people have been targeted by aggressive marketing tactics and persuaded to establish an SMSF without being fully aware of their role and responsibilities, and the fees and charges they are likely to incur," he said.
© 2008 The Age