More superannuation changes flagged as Baby Boomers get anxious: 'Not realistic'

Yahoo

13 hours ago

The government has stirred up a significant amount of controversy over its $3 million superannuation tax plan. But it appears more changes to the country's trillion-dollar retirement system are on the cards, which could make some Australians already anxious about their nest eggs even more worried.
Assistant Treasurer Daniel Mulino has rejected the criticism thrown towards the proposal to tax super balances above $3 million at 30 per cent. He said changes like this, and others in the future, were necessary to ensure superannuation keeps pace with reality.
'I think it's not surprising that a system as large and complex as super is occasionally examined, and occasionally there are policy tweaks. We see this right across the economy,' he told the Australian Financial Review.
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'I don't think it's likely that superannuation is not going to be changed ever again. That's not realistic … superannuation has achieved many very strong outcomes, but that isn't to say it doesn't need to be reformed occasionally.'
Despite some raising their concerns around the $3 million super tax policy, Labor is going full steam ahead with it.
'We've got a mandate for that change,' Treasurer Jim Chalmers recently said at the National Press Club.'We're not looking for opportunities to go back on the things that we have got a mandate for. We're looking for new ideas.'
The government said roughly 80,000 people would be affected by the change, which taxed balances over $3 million at double the current rate.
However, in its current form, that $3 million benchmark isn't indexed, and there are fears millions could be caught up in the tax in decades to come.
The government hasn't ruled out indexing the benchmark in the future.
As Labor mulls more changes to the system, Aussies are getting restless about their retirement savings, particularly after a fairly wild few months.
Donald Trump's global tariff battle and the outbreak of fighting in the Middle East have seen the Australian and US share markets go from worrying lows to record highs, and from sudden panic to excited rejoicing.
AustralianSuper found Baby Boomers were understandably the most worried about their retirement nest eggs, with 33 per cent saying they were anxious about the current market volatility.
But 22 per cent of 25 to 34-year-olds also had fears for their super savings.
'Our research shows 40 per cent of people believe it's better to switch their super to cash or lower-risk options during periods of market volatility and then reinvest when markets recover," Alistair Barker, AustralianSuper's Head of Asset Allocation, said.
But he added that doing this could risk 'adverse long-term outcomes' due to missing market returns following downturns.
Interestingly, though, 45 per cent said they would keep their investments the same even if there was a 'significant' market drop, which AustralianSuper believed reflected the 'growing awareness of super's long-term nature'.
Changing your superannuation investment strategy can be done at any point in your life.
But Barker said it's worth remembering that super is a long game, and if history can teach you anything, it's that the market has always bounced back from rough moments.
"Someone who switched to cash as the market dropped in early April this year would have missed out on the strong recovery in later April and May,' Barker said.
Before Trump's Liberation Day tariffs were announced earlier this year, the Australian stock market (ASX 200) was hitting record highs.
However, it fell from a peak close of 8,555 points in mid-February to 7,343 points in April.
In the US, the Nasdaq 100 hit a high of 22,175 points in mid-February and dropped to 17,090 points in April. The S&P 500 and Dow Jones had similar movements.
These crashes wiped tens of thousands of dollars from Aussies' super accounts, and many feared the ASX and US markets, and their retirement savings, could fall even further.
But the ASX 200 recently eclipsed that February number and recorded 8,587 points on June 10, while the Nasdaq 100 broke a new record this week with 22,190 points.
The S&P 500 and Dow Jones are also just behind their all-time highs as well.
Barker said the same thing happened before, during and after the Global Financial Crisis in the late 2000s and the initial onslaught of the COVID pandemic in the early 2020s.
'These fluctuations are to be expected, and over the long term, superannuation is built to weather these storms," he added.
'We're encouraging our members to focus on time in the market, not timing the market. While it's tempting to make changes when markets fall, history shows that those who stay the course tend to see stronger, longer-term results.'
People worried about the future of their superannuation are encouraged to reach out to their super fund to discuss their options and what results those choices could create.
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