National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Joel Robinson

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe>

"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

[smartcode_project:default project_id=135096 project_image_fid=356818]

After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

[smartcode_project:default project_id=135096 project_image_fid=356828]

Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe>

The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

[smartcode_project:default project_id=135096 project_image_fid=356829]

Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

[smartcode_project:default project_id=135096 project_image_fid=351104]

Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

[smartcode_project:default project_id=135096 project_image_fid=356822]

ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

[smartcode_project:default project_id=135096 project_image_fid=356826]

For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

[smartcode_project:default project_id=135096 project_image_fid=351102]

Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

[smartcode_project_cta:default project_id=135096]

From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

Superannuation

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GUEST OBSERVER
The Howard government, when flush with revenue, made a bad tax decisions which continue to haunt current policy makers. 
It removed the tax on the retirement phase of superannuation, this has been partly resolved by current government’s recent changes. But the Howard government also replaced the full taxation of real capital gains with concessional treatment of capital gains (only 50% of gains taxed). This remains as a tax avoidance loophole which both parties acknowledge but are reluctant to act upon.
The reason is straightforward. Assets put into superannuation in the accumulation phase and held until the retirement phase, can then be sold with no, or minimal, capital gains tax payable. This a major incentive to put assets into super and hold them until the retirement phase.
Without further changes to superannuation taxation, this is simply going to worsen the social problem of the well-off adopting tax minimisation strategies by piling as many assets into super as possible. Remember, it will still be possible to contribute up to A$100,000 per annum as non-concessional contributions.
Consequently, the well-off could easily build up a pool of assets of several million dollars or more, which when sold in retirement will still get very, very, favourable capital gains tax treatment under super.
If superannuation assets in retirement are under the A$1.6 million cap, no tax will be payable on capital gains from sales of assets. If assets are above the cap, the tax rate applied to capital gains is 10%.
For example, an asset costing $100,000 and held for 15 years, increasing in price at an average of 7% per annum would be sold for $276,000. If in super, tax payable would be $17,600. If outside of super, on the top marginal tax rate (including levies) of 49%, the tax payable would be $43,096.
If the concession on capital gains tax was reduced (without addressing the concessionary rate in super), the incentive would be even bigger. For example, if the concession was reduced to 25%, tax payable on the capital gain outside of super would be $64,644, an even larger gap to the tax payable in super of $17,600.
Putting $100,000 per annum into super for 15 years with an average 7% capital gain per annum generates a portfolio worth $2.7 million. The capital gains tax savings on this being in super, rather than outside, are more than $1 million!
So, what are the consequences if a brave government elects to reduce the concession applied to capital gains tax? If they make no changes to super tax arrangements there are at least two likely consequences.
First, there is increased incentive for individuals to set up self managed super funds to exploit these tax arbitrage or minimisation loopholes.
Second, despite taxation of earnings on retirement income balances over the A$1.6 million cap, maximising non-concessional contributions into self managed super funds will remain attractive, to take advantage of the difference in capital gains tax rates on assets inside versus outside super – to the detriment of future government budgets.
The consequences for self managed super funds incentives to borrow (via non-recourse arrangements involving trusts) to purchase assets such as property are unclear. As described on one adviser’s website:
Such borrowing will enable trustees to acquire assets over and above the assets that can be obtained from contributions. The caps on contributions can therefore be “overcome” by such borrowings.
However, it is doubtful that there are tax arbitrage benefits from using leverage to purchase assets via super (because higher marginal tax rates mean higher tax deductions for interest on borrowings outside of super).
For reasons of social equity, any general changes to the capital gains tax rate will also need to address capital gains tax within super. Admittedly there is already a lower concession in the case of super (two-thirds of gains are taxed versus one-half).
But that means taxing capital gains in super at only a 10% rate, leaving strong incentives to thwart higher capital gains tax by locating assets within super. Failing to reduce the capital gains tax concession in super would be likely to undo a substantial part of the effectiveness of any general changes the government has already made.
Kevin Davis is research director of Australian Centre for Financial Studies and Professor of Finance at Melbourne and Monash Universities, Australian Centre for Financial Studies. He is an author for The Conversation and can be contacted <a href="https://theconversation.com/profiles/kevin-davis-3497" target="_blank">here</a>.
 
</body></html>

jchancellor-FAypfDUnLy

Despite superannuation changes, one tax loophole remains: Kevin Davis

<html><body>
GUEST OBSERVER
The Government recently released for public consultation the third round of exposure draft legislation and explanatory material to lower the annual non-concessional contributions (‘NCCs’) cap to $100,000 and restrict eligibility to make NCCs to individuals with superannuation balances below $1.6 million from 1 July 2017.
While this legislation is in exposure draft form only (and has not yet been introduced in Parliament as a Bill) it’s important for advisers and those hoping to get some more money into super by way of NCCs to become familiar with the latest proposals. If the latest proposals get finalised as law, they may be effective from 1 July 2017, leaving a small window of opportunity for people to act.
Perhaps the most time sensitive change is the lowering of the annual NCC cap to $100,000 (down from $180,000) for FY2017 and the corresponding reduction in the amount allowed to be contributed under the three year bring forward rule (the current amount is $540,000 – this is to be lowered to $300,000 from 1 July 2017 subject to transitional rules).
The other key change is the requirement that an individual must have a total superannuation balance (‘TSB’) immediately before the start of each financial year (‘FY’) of less than the general transfer balance cap which is $1.6 million for FY2018 - to be indexed in increments of $100,000 - to be eligible to make further NCCs.
From 1 July 2017, if a member has a TSB of more than $1.6 million on the prior 30 June they will be precluded from making further NCCs.
The practical implication of this, simply put, is that a lot of people may want to make contributions prior to 1 July 2017. However, the complexity of the new proposals means that expert advice and, in particular, appropriate advice – bearing in mind the Australian financial services licence (‘AFSL’) rules – needs to be provided.
The importance of timing is probably best illustrated by a practical example.
First, let’s compare the current position with the proposed changes.
Under the current law, we have an annual NCCs cap of $180,000. Under the current bring forward rule, the total NCCs cap for the current FY and the next two FYs of $540,000, provided that:
· NCCs in that first FY exceeded $180,000
· the member did not trigger the bring forward rule in any of the two prior FYs and
· the member is under age 65 at any time during the first FY.
However, the following changes are proposed from 1 July 2017:
· The three year bring forward rule is retained but the annual $180,000 NCCs cap is to be reduced to an annual $100,000 NCCs cap.
· Individuals with total super balances of greater than $1.6 million on each prior 30 June are unable to make NCCs in next FY.
· Transitional rules apply, meaning that if an individual has triggered the bring forward rule and has not fully used their NCCs bring forward amount before 1 July 2017, the remaining bring forward amount will be reduced on 1 July 2017 to reflect the new annual caps.
 So, how does this work in practice?
Take Jane. Jane is under 65, and has not triggered the bring forward rule in FY2015 or FY2016. She had $100,000 in super on 1 July 2016, and made a NCC of $200,000 on 25 October 2016. She now wants to (and is in a position to do so) make further NCCs.
If Jane makes another NCC before 1 July 2017, she can contribute a further $340,000 (as she gets the benefit of the full $540,000 bring forward cap).
But if Jane waits until 1 July 2017 to make a further NCC, the maximum amount she can contribute is a further $180,000. Why? Because as Jane did not fully use her NCC bring forward amount before 1 July 2017, the remaining bring forward amount is reduced on 1 July 2017 to reflect the new caps. The bring forward cap on 1 July 2017 is $380,000, so $380,000 - $200,000 (her NCC made on 16 September 2016) = $180,000.
What if Jane triggered the bring forward rule in FY2016? Let’s say that Jane makes an NCC of $200,000 in FY2016. If she waits until 1 July 2017 to make another NCC, the transitional cap of $460,000 will apply. That means that Jane can only contribute a further $260,000 ($460,000 -$200,000).
You can see how the timing can result in NCCs of $540,000 versus NCCs of $460,000 or $380,000 depending on whether Jane invoked her bring forward rule in FY2016 or FY2017. What a difference a day or a year can make!
You can see from the above figures that many clients will appreciate being contacted by their advisers to give them a heads-up about this limited window of opportunity, and some clients will almost certainly want to make contributions prior to 1 July 2017.
But in light of the new AFSL regime, advisers will have to be careful in terms of how they convey this information to clients. It’s really important that advisers make themselves familiar with the relevant provisions of the Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth) relating to financial services and financial product advice.
Broadly, if you make a recommendation or provide an opinion that is intended to influence a person in relation to a financial product, or could reasonably be regarded as being intended to have such an influence, then you are providing financial product advice. An SMSF is considered a financial product under these rules.
So how can you keep clients updated on the proposed superannuation reforms if you don’t hold an AFSL, or you hold an AFSL but don’t want to provide a Statement of Advice?
Remember that you don’t need to be within the AFSL regime if you provide factual advice only. Factual advice, according to ASIC, is objective and factual information that is not intended to influence a person’s decision on a financial product. For example, providing a client with a government factsheet on the superannuation reforms (you can find a list of these on the budget website) would be factual advice. But what if a client presses you for further information, like ‘ok, I’ve read the factsheet, but what do the new NCC rules mean for me?’ ASIC RG 244 contains a template for dealing with these sorts of questions, with a handy introduction:
I can give you some factual information about making extra contributions to your superannuation this financial year, but I’m unable to provide you with any advice about contributing to your superannuation fund. If you would like personal advice about contributing to superannuation, I can set up a meeting for you with someone from our financial advice team. [Naturally, this wording could be varied to suit the circumstances as many accountants will need to refer such matters to an adviser who has an AFSL.]
Providing this factual information may then equip the client to make a decision on their own, and the client might then instruct you to assist them to facilitate the contribution to super. If this is indeed execution only (ie, the client has already made up their mind, and simply wants you to make it happen), then an AFSL is not required, but remember to be aware of the necessary disclaimers.
If you’re unsure of what should be included in the disclaimer, the <a href="https://www.dbalawyers.com.au/strategy-compliance-kits/non-licensed-afsl-smsf-advisers-kit/" target="_blank">DBA Lawyers non-licensed (AFSL) SMSF Advisers Kit</a> contains templates of various execution only services, including a range of disclaimers that can be used.
Alternatively, the client may press you for a recommendation tailored to their personal circumstances. Making such a recommendation would fall within the AFSL regime and would therefore need to be handled by an appropriately licensed adviser.
For detailed coverage of this topic, you might also want to watch this <a href="https://www.dbanetwork.com.au/dbalawyers/seminars3/6106/Special-SMSF-Training" target="_blank">webinar</a>.
DBA Lawyers can be contacted <a href="https://www.dbalawyers.com.au" target="_blank">here</a>.
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Property 101: The new NCC rules and the new AFSL regime

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APRA has released updated governance requirements for APRA-regulated superannuation trustees with a revised prudential standard and prudential practice guide on governance. 
The amendments to the prudential standard include requiring RSE licensees to have in place a governance framework, requirements for these policies to address the nomination, appointment and removal of directors, board renewal, director tenure limits and board size. 
The prudential practice guide has been updated to clarify APRA’s expectations regarding key governance practices, to support the new requirements set out in the prudential standard. 
Helen Rowell, APRA deputy chairman said APRA places significant importance on sound governance of the superannuation industry, and these refinements to the prudential framework support the ongoing evolution of governance practices across the superannuation industry.
Final SPS 510 will take effect on 1 July 2017, but APRA expects RSE licensees to consider the guidance in SPG 510 immediately.  
Further details of the requirements, including the final prudential standard and prudential practice guide can be found <a href="https://www.apra.gov.au/Super/Pages/Governance-arrangements-August-2015.aspx" target="_blank">here</a>.
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Property 101: APRA releases enhanced governance requirements for superannuation trustees

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Rroblems buying a home is a major issue for almost every Australian under 30, according to Rick Cosier, a financial adviser and Principal of <a href="https://www.selectadviser.com.au/adviser/profile/richard+cosier_5204584" target="_blank">Healthy Finances Ltd</a>.
He noted on a CuffeLinks blog that a measurement of official house price data and mortgage costs by comparison website RateCity looked at the salary required for a single person to afford repayments on a 30-year loan. 
The main criterion was that the individual could not spend more than a third of their income on housing costs. Here are the results for Sydney:
Median House Price: $825,000
Loan Size: $660,000
Interest Rate: 4.74%
Monthly Repayment: $3,439
Annual Income Needed: $137,556
But Cosier suggests these figures are not an accurate reflection on what is happening.
"First, few single first home buyers earn $137,556. 
"Secondly, the median house price in Sydney is now a lot more than $825,000.
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"Thirdly, people are clearly spending more than one third of their income on loan repayments."
He suggested property prices are more than seven times average income levels.
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Whilst not many 30-year-olds earn $137,556, Cosier thought it’s quite possible that a 30-year-old couple can be jointly earning $120,000. 
"Given the lower tax rates that two incomes generate over the single person, a 30-year-old couple could generate sufficient income at today’s interest rates to make the necessary mortgage payments listed above."
However, he noted home ownership in Australia has fallen from 71% to 67% in the last 20 years, and more significantly, for Australians aged between 25 and 34, the proportion has fallen from 39% to 29%, and for ages 35 to 44, from 63% to 52%.
First home buyers now make up only 13% of new home loans.
He observed that overseas buyers and investors appear responsible for much of the post-2010 surge, and favourable tax concessions are pushing homes out of reach for a high percentage of younger Australians.
Anecdotal evidence from clients suggests that the desire to get a foothold in the property market is causing many people to adopt strategies that are increasingly risky.
He suggests if the debt repayment becomes difficult due to unemployment, interest rate rises, a property downturn, divorce or an unexpected pregnancy, both the parents and the children could suddenly have a major cash flow problem. 
"It wouldn’t take much for both to lose their homes."
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Home ownership struggles will drive changes: Rick Cosier

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GUEST OBSERVER
The SMSF Association has produced compelling evidence that the Federal Government should increase the concessional contribution cap for people aged 50 and over and extend the carry forward of concessional contributions.
Research undertaken for the organisation by the actuarial consultancy firm Rice Warner “conclusively shows” that people only begin making significant voluntary contributions to superannuation from their mid-50s onwards.
The research confirms what the Association has long been telling policy makers: that there is a sharp difference between compulsory and voluntary contributions to superannuation – the former increase gradually over time while the latter jump dramatically in the years leading to retirement.
The Rice Warner research used a sample of 14,351 SMSF members provided to the Association by BGL, a leading SMSF software provider.
This research graphically shows why people aged 50 and over need to have a more generous contribution cap than the $25,000 that will apply from 1 July 2017.
The Association has argued for the Government to retain the current $35,000 cap for older workers and notes that even a compromise of a $30,000 cap for those over 50 years will still benefit fund members trying to save their superannuation savings to achieve a dignified retirement.
The research highlights the significant impact that voluntary contributions can have on a fund member’s superannuation balance.
The research also highlights that if the carry forward concessional contribution limit was increased from a balance of $500,000 to $750,000 it would benefit 13% of the members in the sample, of which half would be female. This measure alone would go a long way towards building adequacy for women.
The Association believes that this change would increase the effectiveness of the Government’s carry forward policy and deliver better results for people who have had volatile incomes throughout their careers and are trying to build adequate retirement savings.
These important policy changes will allow a greater opportunity for people to achieve a secure and dignified retirement by building their retirement savings.
It’s also significant that women’s contribution patterns show that when they are in the workforce they are engaged with their superannuation in an SMSF, and this particularly applies when they are in the 60-plus age group.
Rice Warner CEO Michael Rice said the underlying focus of the research was to measure the impact of recently proposed legislative changes to tax treatment in superannuation on SMSF members and potential refinements.
The three most significant of those proposed legislative changes were: the introduction of a $1.6 million cap on the amount that can be transferred from accumulation accounts to pension accounts, the reduction of the concessional contribution cap to $25,000 from $35,000 and the introduction of a $100,000 yearly non-concessional contributions cap (restricted to those with balances under $500,000).
The research shows that the proposed changes will have a material impact on the SMSF population and will restrict members’ ability to save in superannuation.” 
Andrea Slattery is managing director and chief executive officer of the SMSF Association and can be contacted <a href="https://www.smsfassociation.com" target="_blank">here</a>.
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Research shows ‘strong argument’ to lift concessional cap

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<img src="https://counter.theconversation.edu.au/content/66209/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
So much of the national conversation about superannuation simply assumes that “savings for retirement” is synonymous with “superannuation savings”. This is a big mistake. 
This mistake partly explains why we got into such a mess with excessively generous tax breaks for super. It also underlies misguided plans to increase superannuation contributions to 12 percent of earnings. 
<h2>Super doesn’t equal retirement savings</h2>
Any sensible conversation about superannuation policy must start by recognising how households save for retirement, and why.
It’s become conventional wisdom that people will retire on their superannuation savings, perhaps topped up by the Age Pension. Even ASIC’s retirement savings calculator – which enables people to estimate their future retirement income – presumes that superannuation and the Age Pension alone will fund retirement. The assumption that superannuation accounts for the bulk of households’ retirement savings has underpinned claims that most Australians aren’t saving enough for their retirement. 
Yet the stark reality is that superannuation savings account for only a small portion – about 15% – of the wealth of most households. Even without counting the family home, the average Australian saves as much outside as inside the super system. For older households close to retirement, assets other than super are often even larger than the value of their homes.
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Super’s modest contribution to retirement savings is true for households of most levels of wealth and income, as confirmed by new analysis for the Grattan Institute of both ABS data and the Melbourne Institute’s HILDA survey. 
It is true that many of those with little wealth report a larger share of savings in superannuation than in other assets, but only because their total savings are small. For such low-wealth households, the Age Pension will always be their main source of retirement income.
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<h2>Even younger households save a lot outside of super</h2>
When confronted with facts about the modest contribution of super to retirement savings, super’s cheerleaders point out that the system is immature. Compulsory super only began in 1992, with compulsory contributions of 3% of wages, rising to 9% by 2002 and 9.5% since 2014-15. It will be another two decades before typical retirees will have contributed at least 9% of their wages to super for their entire working lives. So surely super will account for a larger share of household savings in future? 
While we might expect younger households to save more in super, and less outside, that’s simply not true. Their assets outside are typically as large as their assets inside superannuation, even without counting home ownership. This is so even for households in the 25-34 and 35-44 age groups who have had high levels of compulsory super for most of their working lives. 
<h2>Non-super savings will remain large</h2>
The enduring importance of non-super savings should come as no surprise. While compulsory superannuation forces people to save more via superannuation, there’s little evidence that non-super savings have fallen very much in response. 
A recent Reserve Bank of Australia study found that each extra dollar of compulsory superannuation savings was accompanied by an offsetting fall in non-super savings of only between 10 and 30 cents. As a result, compulsory super has added a lot to private savings in Australia – an estimated 1.5% of GDP a year over the past two decades. 
There is little reason to expect this pattern of non-super saving to change radically. Households hold a material portion of their wealth outside of super so that they have an option to use it before turning 60, and because they are nervous that government may change the superannuation rules before they retire.
Other asset classes, such as negatively geared property, are taxed lightly and so will likely remain an attractive vehicle for accumulating wealth. Whatever the motivation, most households heading towards retirement have substantial non-super, non-home assets to draw on.
Super as a proportion of total assets is somewhat higher for 55-64-year-olds when compared to younger households. This is partly because households aged over 55 contribute more voluntarily. They transfer assets they have already accumulated into super to attract a lower tax rate, knowing that if necessary they can withdraw immediately, or within a year or two. While this asset shuffling reduces their tax bills, it adds little to genuine retirement savings. 
<h2>One implication: super tax breaks should be more limited</h2>
Acknowledging super’s more modest contribution to retirement savings has big implications for retirement incomes policy. 
Since most Australians will rely upon a range of assets and income sources to support their retirement, we shouldn’t expect superannuation alone to provide an “adequate” or even a “comfortable” retirement, as the super industry demands. 
A number of prominent studies claim we face a retirement savings crisis, but they ignore non-super savings. This leads them to advocate ever-more-generous tax breaks so that super alone is enough to provide an adequate retirement income, even though the reality of retirement incomes will be different for most households. 
The government plans to legislate that the purpose of superannuation is to provide income to supplement or substitute the Age Pension. This implies that super tax breaks should cut out at the point that people no longer qualify for even a part Age Pension (a pre-tax income of A$75,000 for a couple). If the earnings on non-super savings are ignored, then this leads to super tax breaks for a lot of people unlikely to qualify for an Age Pension. 
The next round of reforms to super tax breaks will need to do better on this score. 
<h2>Another implication: no need to increase the Super Guarantee to 12 percent</h2>
Ignoring non-super savings may also lead policymakers to force people to save too much through superannuation. A common aim of retirement income policy is to support lifetime consumption smoothing: maintaining a more consistent standard of living across people’s lives. Compulsory saving via the Superannuation Guarantee forces people to save while they are working so they have more to spend in retirement. 
But there is no magic pudding when it comes to superannuation. Higher compulsory super contributions are ultimately funded by lower wages, which means lower living standards for workers today. 
In fact current levels of compulsory super contributions and Age Pension are likely to provide a reasonable retirement for most Australians. 
If we project forward the retirement income for a median income earner working for 40 years, and account for just compulsory super contributions – in other words, we ignore any voluntary superannuation contributions and savings outside of super – we find that today’s 9.5% Superannuation Guarantee and the Age Pension would provide the average worker with a retirement income equal to 79% of their pre-retirement wage (also known as a replacement rate). 
About two-thirds of income earners can expect a retirement income of at least 70% of their pre-retirement income – the replacement rate for the median earner used by the Mercer Global Pension Index and endorsed by the OECD. 
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Once non-super savings are taken into account, many workers are likely to have a higher standard of living when they retire in 40 years’ time than during their working life. This is before we consider that people have much lower spending needs in retirement, particularly in the later stages of life when government covers much of their largest costs of health and age care. 
This modelling of the future shouldn’t be a surprise. It matches what is already happening today. The non-housing expenditure of retirement-age households today, many of whom did not retire with any super, is typically more than 70% of that of working-age households today. 
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Current levels of retirement spending appear to be sustainable. Most households in retirement only draw down very slowly on their superannuation and their broader savings. Consequently, most are likely to leave material bequests. 
The policy implication is that there is no compelling case to compel households to save 12% of their income through the Super Guarantee as currently legislated. This would effectively compel most people to save for a higher living standard in retirement than they enjoy during their working lives. 
In practice, given typical retiree spending patterns, a 12% Super Guarantee will primarily result in larger bequests. It would be better to leave the Super Guarantee where it is – at 9.5% of wages. This is consistent with the 2009 Henry Tax Review, which found that the Super Guarantee of 9% then in force would be enough to give most Australians “a substantial replacement of their income, well above that provided by the Age Pension”. 
<h2>Ignore the vested interests</h2>
Powerful vested interests are pushing the idea that super equals retirement savings. Yet such a view is inconsistent with the facts. Super’s importance to retirement savings has been overblown for far too long. 
As the debate heats up over policy for Australia’s A$2 trillion super sector, recognising what households actually save, and why, would be a big step in the right direction.
John Daley is chief executive officer, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">here.</a>
Brendan Coates is a friend of The Conversation and can be contacted <a href="https://theconversation.com/profiles/brendan-coates-154644" target="_blank">here</a>.
Hugh Parsonage is associate, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/hugh-parsonage-210671" target="_blank">here</a>. 
All are authors for The Conversation.
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The superannuation myth: why it’s a mistake to increase contributions to 12 percent of earnings

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<img src="https://counter.theconversation.edu.au/content/64733/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Federal Government’s plan to wind back superannuation tax breaks would create a fairer superannuation system more aligned to its purpose of providing income to supplement the Age Pension, according to new Grattan Institute analysis.
It would also contribute to budget repair.
The analysis shows how either of the reform packages proposed by both major parties would be a big step in the right direction. It explores how the current system provides much larger benefits to those with such ample resources that they will never qualify for an Age Pension. And it shows how the proposed changes would affect them - and pretty much nobody else.
As they debate the Coalition government’s proposals to wind back tax breaks on superannuation, politicians on all sides can do three big things: create a better and fairer superannuation scheme; take an important step towards repairing the Commonwealth budget; and show that our political system still works.
Both main parties have laid out their preferred reforms to super tax concessions. While they agree on all but the details, they are yet to strike a deal. Our new research shows what is at stake.
<h2>A better, fairer, super system</h2>
First and foremost, the proposed reforms to superannuation announced in the 2016 budget are about making super better, and fairer.
Tax breaks should only be available when they serve a policy aim. The purpose of super identified in the budget and <a href="https://sjm.ministers.treasury.gov.au/media-release/053-2016/">due to be defined in legislation</a> is to provide income in retirement to substitute or supplement the Age Pension. Super tax breaks don’t fulfil this purpose when they benefit those who were never going to qualify for an Age Pension in the first place.
The plans of both the government and the ALP would be big steps towards aligning super tax breaks more closely with their purpose. They would trim the generous super tax breaks enjoyed by the top 20% of income earners – people wealthy enough to be comfortable in retirement and unlikely to qualify for the Age Pension.
Retirees with large superannuation balances will start paying some tax on their superannuation savings, but still pay much less tax than wage earners on lower incomes. For a small proportion of women with higher incomes later in life, the changes will reduce their catch-up contributions. Yet the changes will reduce the tax breaks far more for wealthier old men.
Claims that the budget changes will affect many low and middle-income earners are wrong. Our research shows the changes will affect about 4 percent of superannuants, nearly all of them high-income earners who are unlikely to access the Age Pension. Nor are the proposed changes retrospective. Many reforms affect investments made in the past, and no-one suggests they are retrospective. Rather, the changes will affect taxes paid on future super earnings, and entitlements to make future contributions to super.
Any plausible combination of the packages on offer would make the super system fairer. At present, someone in the top 1% of income earners can expect to receive nearly three times as much in welfare and tax breaks from super in their lifetime as an average income earner. The government’s changes would trim some of these excesses: the top 1% would instead receive just twice as much as low or average income earners. And by targeting tax breaks that go to the top 20 percent of income earners, neither side’s plan would see much of an offsetting increase in Age Pension spending.
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Modelling on super reforms The Grattan Institute, Author provided
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<h2>An unsustainable tax system for seniors</h2>
Decisions by the former Coalition Government to abolish taxes on superannuation withdrawals in 2007 and radically increase the amount senior Australians could earn before paying income tax have dramatically reduced the tax bills of older Australians.
These changes are one of the main reasons why households over the age of 65 (unlike households aged between 25 and 64) now pay less income tax in real terms today than they did 20 years ago. At the same time, the workforce participation rates and incomes of seniors have jumped. Generous super tax breaks have been funded by deficits. The accumulating debt burden will disproportionately fall on younger households.
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Tax breaks to older Australians are also a major cause of the increase in the “taxed nots” identified by Treasurer Scott Morrison. The number of older Australians not paying any income tax has increased from three in four in 2000 to five in six today. The rise of these “taxed nots” coincides with the introduction of the Senior Australian Tax Offset in 2000, and tax-free super withdrawals in 2007.
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<h2>Repairing the budget</h2>
The increased cost of services and reduced taxes per older household explain in large part why the Commonwealth budget is in trouble. For eight years, budget deficits have persisted at about 2 to 3 percent of GDP, and the future looks little better. The returned Turnbull government is putting a priority on budget repair, now described as a “massive moral challenge” by the Prime Minister. Winding back some of the tax breaks given to older Australians during the happier times of the mining boom is an obvious step.
The government’s super package would save the budget at least A$800 million a year. Alternative proposals by the ALP, which broadly supports the Coalition’s reforms, and then goes further, would save more than A$2 billion a year. Should Treasurer Morrison seek a deal with the ALP or the Greens, any “concessions” will mostly improve the budget position.
Nor is the Turnbull government likely to find more attractive opportunities for budget savings. Unlike most of the government’s savings measures, changes to super tax breaks are broadly popular. Electorates more likely to be adversely affected by the super changes – that is, those with more old and wealthy voters – tended to swing less to the ALP at the last election than other electorates. And a survey before the election showed that the proposals had more support amongst those most likely to be adversely affected.
<h2>A test for our political system</h2>
Even after the reforms, super tax breaks will still mostly flow to high-income earners who do not need them, and the budgetary costs of super tax breaks will remain unsustainable in the long term. Further changes to super tax breaks will be needed in future. But agreeing to the super package now before the Parliament would be progress in the right direction. And there is a broader issue at stake.
Super is only the first of a number of difficult choices that will come before the Parliament as government seeks to promote economic growth in a sluggish global economy, and bring the budget back under control. There is no easy road to these ends that will keep everyone happy all the time. Pragmatic compromise will be critical.
The proposed changes to super tax breaks are built on principle, supported by the electorate and largely supported by the three largest political parties. If we cannot get reform in this situation, then our political system is in deep trouble. In coming weeks, our MPs have the chance to show how government in Australia can still change the nation for the better.
John Daley is chief executive officer, Grattan Institute, and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/john-daley-1870" target="_blank">here</a>.
Brendan Coates is a friend of The Conversation and can be contacted <a href="https://theconversation.com/profiles/brendan-coates-154644" target="_blank">here</a>.
William Young is associate, Grattan Institute and can be contacted <a href="https://theconversation.com/profiles/william-young-260984" target="_blank">here</a>.
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New Grattan research shows what is at stake in the superannuation debate

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<img src="https://counter.theconversation.edu.au/content/64297/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
There is little justification in giving rich households generous superannuation tax concessions, as wealth has a limited impact on spending and wellbeing in retirement new research suggests.
Retirement income is at the core of the controversy around the federal government’s proposed changes to superannuation and yet very little is known about how retirees actually spend their money.
Our research found that, despite the large variation in the income levels of households, wealthier households spend at a similar level to those with more modest wealth.
Retiree couples aged 65-74 spent just $33,200 a year on average, while single households of the same age spent an average of only $18,400 in 2014.
These figures fall below the benchmarks set by the Association of Superannuation Funds of Australia (ASFA), which suggests a couple needs $33,784 a year to afford a “modest” lifestyle, and 20 percent lower than the $23,489 figure it benchmarked for single households in 2014.
In March, the federal government adopted the thinking from the Financial Systems Inquiry that superannuation’s objective was to provide income in retirement to substitute or supplement the Age Pension. But Treasurer Scott Morrison remains under pressure not to go through with plans to limit lifetime non-concessional superannuation contributions to $500,000.
The government appears committed to other super reforms aimed at dismantling super concessions for the wealthy, announced in its May budget.
At present retirement income needs are estimated either as a proportion of income during the working life or by using income “standards” (such as those used by ASFA) which estimate the income needed to attain a given quality of life.
Our analysis, using data from the most recent Household, Income and Labour Dynamics in Australia (HILDA) survey, shows spending levels are largely driven by cost-of-living pressures such as geographical location (with spending highest in Sydney and lowest in regional South Australia). Household structure and home ownership are also important.
It’s likely that the wealthiest households are indeed “saving” – either deliberately to ensure they can pass on their wealth to the next generation, or to self-insure against possible future aged-care and health expenses – particularly if they own their home outright.
In comparison, retirees who are in the rental market spent on average $11,500 on rent – almost 40 percent of their total annual expenditure. This points to a need for a real focus on the plight of retirees exposed to the rental market, particularly single-person households.
With a large bulk of their spending swallowed up by rent, these households appear to struggle to afford basic household items. Our analysis showed households that rely on the Age Pension as their major source of income had much lower relative spending on health care and insurance – $1,900 annually, compared to $4,300 for self-funded retirees.
Single-person households also struggled, with almost 80 percent of households unable to reach even a modest standard of living.
For these households, increases in welfare payments or housing assistance will likely have a greater impact on well-being than raising the current 9.5 percent Superannuation Guarantee to 12 percent.
On the positive side, we found that superannuation already provides a valuable source of income for younger retirees – around one-fifth of annual income for those aged 65-74. Superannuation wealth has grown enormously over the past decade. In 2014, households aged 65-74 had superannuation assets 190 percent higher (in real terms) than their counterparts in 2002.
And this huge growth in superannuation and household wealth has coincided with increases in household spending, with current retirees spending more than previous cohorts.
Further growth of the superannuation system through greater participation and the rising Superannuation Guarantee will likely see the wealth of retirees continue to grow. But until there is a clearer picture of superannuation wealth and retirement income, it will be hard to ensure superannuation reforms deliver on their objective.
Eliana Maddock is research officer, Australian Centre for Financial Studies and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/eliana-maddock-293619" target="_blank">here</a>.
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Rich and poor retirees spend about the same

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GUEST OBSERVER 
The Productivity Commission’s draft report on our super system may make self-managed super funds (SMSF) more popular.
The draft report, designed to stimulate discussion about competition in the superannuation sector, examines whether the system is working in favour of fund members.
It questions whether larger institutional funds and service provider groups are passing on benefits to fund members in the form of lower fees, better services or improved investment returns.
The report refers to SMSFs as a core segment of the superannuation industry, and a benchmark to which APRA-regulated funds can be compared.
The Productivity Commission’s findings so far will come as no surprise to many Australians, especially those who already have their retirement savings in a self-managed fund.
Granted, technology is improving and fees are coming down, but the Productivity Commission believes there is still a long way to go. Ultimately criticism of the way APRA-regulated funds operate could motivate many more Australians to take control of their retirement future and set up their own self-managed fund.
The SMSF sector is competition operating in its purist form - its members are individuals who have exercised their choice as free consumers to establish their own funds but they are not without vulnerabilities.
The government’s view that SMSFs swim ‘outside the flags’ means they are on their own when victim to financial misconduct. The Trio Capital fraud saw 400 SMSFs, who lost a total of $60 million, refused any form of government compensation or support. It’s vital trustees have access to the independent advice and guidance they need to avoid the traps.
The Productivity Commission is not just reviewing competition and efficiency in the superannuation sector, but whether trustees of APRA-regulated funds are acting in the best interests of members. 
Any doubts about trustees acting in members’ best interests will ring alarm bells. People all over the world are already becoming more cynical of institutions, from the ‘Brexit Effect’ to the ‘Trump Effect’, but here we might just see the ‘Super Effect’
Christopher Page is managing director of market intelligence company Rainmaker and can be contacted <a href="https://www.rainmaker.com.au" target="_blank">here.</a>
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Review of super system will push more Australians into SMSF

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<img src="https://counter.theconversation.edu.au/content/63395/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Productivity Commission has released its draft report setting out criteria for assessing the competitiveness and efficiency of the superannuation system. The final report will be delivered in November this year.
The study, the first stage of a three-stage exercise, is part of the Government’s response to the 2014 Murray Financial System Inquiry. Murray recommended that the Government “introduce a formal competitive process to allocate new default fund members to MySuper products, unless a review by 2020 concludes that the Stronger Super reforms have been effective in significantly improving competition and efficiency in the superannuation system.”
This first stage does not assess the superannuation system; it merely sets out criteria for evaluating it. The second stage, to be delivered by mid-2017, will develop alternative models for the competitive process. The third and final stage will review the system. Only then, and only if the government finds there is still significant inefficiency, will it consider introducing one or more of the “models” developed in the second stage.
<h2>What’s at stake?</h2>
The efficiency of the superannuation system makes a big difference to incomes in retirement. Today, the system charges fees totalling about $16 billion, or 1% of GDP. There are too many unwanted accounts, too many funds, and many funds charge fees that are too high. Costs that are too high by even half a percent a year can reduce balances at retirement by over 10%, and many Australians are paying more than that in excess fees. The recent Stronger Super reforms and the Future of Financial Advice reforms have reduced fees somewhat, but billions of dollars in excess cost remain.
<h2>What the Commission proposes</h2>
The challenge in evaluating superannuation is to make sense of the system’s jargon and its maze of products, sales channels, governance structures, and performance metrics. Even people with real financial expertise struggle to assess funds' performance, and many members are inexpert and disengaged. What’s more, some providers and advisers have interests that are not aligned to those of members.
The Commission proposes a rich set of performance measures for this complex system. It begins from the Government’s announced objective for superannuation: “to provide income in retirement to substitute or supplement the Age Pension”, and proposes five supporting goals, including maximising net returns, meeting member needs, providing appropriate insurance at least cost, complementing a stable financial system, and competition that drives efficient outcomes.
It then sets out separate criteria for the competitiveness and efficiency of the superannuation system. Sensibly, it notes that “competition in the superannuation system is not an end in itself, but provides benefits to the community as a whole and members in particular when it promotes efficient outcomes.”
It proposes that the system’s competitiveness be assessed by reviewing such measures as whether members are engaged and informed, whether advisers and sellers are acting in members' interests, whether funds compete on costs and pass on cost savings to members, and whether member outcomes are affected by vertical or horizontal integration.
The criteria it proposes for the system’s efficiency include net returns after fees and tax, the costs of the system, the extent to which the system’s services align to members' needs and preferences (such as risk management), and the extent of unpaid contributions and lost accounts.
These criteria are all sensible, though many will prove much easier to specify than to measure against an ideal or acceptable outcome. As the draft notes, work must begin now to ensure the data is in place when it is needed.
<h2>Three critical additions to ensure the process works</h2>
The Commission needs to build on its draft report in three directions.
First, it should be more explicit about the weighting given to different performance measures. Not all measures are equally important.
Second, it should be clear about what matters to different fund members. The draft notes that default and choice superannuation members have different needs; those needs should be clearly set out in the final report. Many of the 9.5 million Australians with default products are disengaged. Few will engage much until they near retirement, if they ever do. Many do not have financial expertise. That means that risk-adjusted net returns should be given strong weight in evaluating default products.
Lost accounts and unpaid contributions will also be particularly important for this part of the market. For the choice part of the market – currently about 5 million people – returns should remain paramount, but member engagement and advice quality may play a larger role.
Third and most critically, the Commission must strengthen the links between the three stages of its work. The government’s response to the Murray Inquiry and the Commission’s Terms of Reference for the first two stages make it obvious that the three are intended to work closely together. Stage 1 must define criteria that inform the development of competition models in Stage 2, as well as the assessment of those models against today’s model in light of the findings of Stage 3.
But the draft hardly discusses these links. For example, there is no discussion of how the proposed measures will inform Stage 2. And there is no discussion of which measures will help government decide whether to deploy the models designed in Stage 2. Without much tighter links between stages, the whole purpose of the process will be defeated.
At a minimum, the set of measures in Stage 1 must include the performance of funds by governance type (industry, public sector, and for-profit) in different competitive contexts (tender, awards, direct, and advised) and across product types (default and choice, accumulation and post-retirement).
It must also include the performance of tenders for investment management and administration separately. And it must include the implications of those segment outcomes for the whole system. That type of detailed assessment will be vital if the Commission is to assess competitiveness and efficiency and so inform the government’s decision about whether and how to change the competition model for default super.
<h2>Broader lessons?</h2>
The Commission’s process might seem cumbersome, but it could prove a model for a better way of developing policy. Superannuation is not the only sector in which competition seems to be leaving many consumers little better off.
There are at least two opportunities to roll out the multi-stage market assessment model. First, in its response to the Murray Inquiry, the Government has already committed to implement periodic reviews of competition in the broader financial sector.
More generally, last year’s Harper Review recommended that government set up a new body that would have the power to initiate what it called “market studies”. That was one of the few Harper recommendations the Government left hanging, perhaps because it wasn’t convinced a new body was needed.
But if the Commission’s three-stage process can credibly assess both superannuation system outcomes and the policy options to improve them, it could prove a model for further market studies, whether undertaken by the Commission, the ACCC, or some new body.
Jim Minifie is productivity Growth Program Director, Grattan Institute and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/jim-minifie-10230" target="_blank">here</a>.
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