What's new

Calculator update 1 July 2023

Monday, 3 July 2023

Today we released the updated Retirement Income Simulator for the 2023-24 financial year. There were no changes to the underlying calculations, just parameter updates as follows:

• Co-contribution eligibility income threshold to $43,445
• SG minimum rate to 11.0% of salary
• SG maximum contributions base to $249,080
• Age pension means test and deeming thresholds
• Underlying indexed values of contribution caps and transfer balance cap
• Removal of minimum drawdown relief that had applied in earlier years

In addition, disclosure relating to these parameters was updated

Tags: update

Superannuation calculator regulatory update goes live

Tuesday, 20 December 2022

Further to our post on 14 July, the required regulatory changes were released in an update that included the following changes:

• Standard default inflation rates of 4% p.a. for salary growth and 2.5% p.a. for price growth
• Ensure that default investment returns are consistent with the standard default inflation rates (RG 276.212)
• Future values are deflated using salary growth for the period up to retirement age and price growth for the period after retirement age
• Relevant disclosure updates that reflect these changes

The changes that will be most obvious to users of the Retirement Income Simulator are in relation to retirement adequacy. To speak meaningfully of a level of retirement income, you need to index the income at the same rate you deflate it. ASIC now requires that retirement income is deflated with price growth; we have therefore changed the indexation of retirement income to price growth, instead of wage growth. This will give the appearance that retirement incomes are higher, last longer or both. In reality this is because retirement incomes grow more slowly under the new approach, and will not keep pace with improvements in living standards enjoyed by the wage earning community.

A related change is the presentation of the Age Pension. In reality, the Age Pension is indexed with the higher of wage and price inflation; in the long term this is wage inflation. Hence in the Simulator, you will see the Age Pension growing in real terms even after the maximum entitlement is reached. This is because it increases with wage growth, but is being deflated with price growth.

Tags: regulation

Superannuation calculator regulations updated

Thursday, 14 July 2022

On 30 June 2022, ASIC released Corporations (Superannuation Calculators and Retirement Estimates) Instrument 2022/603 and Regulatory Guide 276: Superannuation forecasts: Calculators and retirement estimates. (Superannuation calculators have been removed from the existing generic calculators instrument.) The majority of the changes are focused on retirement estimates, but there are some changes for superannuation calculators. Key points are:

• The Retirement Income Simulator is a superannuation calculator under the new regulations
• Superannuation calculators are member data agnostic
• Personal data can be inputted into a superannuation calculator
• 'Inputted' includes inputted with member consent
• Super calculators must use standard default inflation rates of 4% p.a. for salary growth and 2.5% p.a. for price growth
• Providers of calculators are encouraged to ensure that their default investment returns are consistent with the standard default inflation rates (RG 276.212)
• Future values must be deflated using salary growth for the period up to retirement age and price growth for the period after retirement age
• The disclosure requirements are unchanged from the generic calculators requirements

There is a six month transition period to the new regulations, which must be complied with by 1 January 2023. We are expecting to have the Retirement Income Simulator updated well before that.

Tags: regulation

Calculator update 1 July 2022

Friday, 1 July 2022

Today we released the updated Retirement Income Simulator for the 2022-23 financial year. There were no changes to the underlying calculations, just parameter updates as follows:

• Co-contribution eligibility income threshold to $42,016
• SG minimum rate to 10.5%
• SG maximum contributions base to $240,880
• Age pension means test and deeming thresholds
• Underlying indexed values of contribution caps and transfer balance cap
• Extension of minimum drawdown relief for 2022-23

In addition, disclosure relating to these parameters was updated

Tags: update

Calculator update 1 July 2021

Thursday, 1 July 2021

Today we released the updated Retirement Income Simulator for the 2021-22 financial year. There were no changes to the underlying calculations, just parameter updates as follows:

• Co-contribution eligibility income threshold
• SG minimum rate
• SG maximum contributions base
• Age pension means test and deeming thresholds
• Underlying indexed values of contribution caps and transfer balance cap
• Extension of minimum drawdown relief

In addition, disclosure relating to these parameters was updated

Tags: update