There has been lots of talk about the winners and loser in this year's budget.
One group of winners are younger Australians following the announcement of the government’s plan to ensure young Australians retain more of their superannuation.
A central theme of the 2018-19 Budget is to safeguard Australians’ superannuation savings from steep fees associated with having multiple superannuation accounts.
The Australian Taxation Office (ATO) will reunite working Australians with lost and inactive superannuation that will prevent people with several accounts from having funds diminished by product fees.
Recognising these members are generally younger low-income Australians, the government plans to;
- Protect super balances by capping nominated fees on accounts with balances < $6,000 at 3%
- Ban exit fees to make it more affordable for Aussies to consolidate their super
- Enforce fewer automatic insurance policies to protect low balances from being eroded
A recent finder.com.au survey of 1,786 Australians earning superannuation shows only 37% of Generation Y (24 to 38-year-olds*) know their superannuation balance, which is lower than the national average of 42%.
Alarmingly, 13% of this cohort don’t know how to check their superannuation balance, or have never checked their balance.
Do you know your superannuation balance?
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Source: finder.com.au - January 2018 survey of 1,786 Australian adults earning super
Bessie Hassan, Money Expert at finder.com.au, says young Australians should be delighted with the changes to superannuation, but it’s up to them to take charge of their funds.
“Young working Australians have come out as the ‘winners’ in the 2018-19 Budget as the changes will ensure more of their earnings are retained for their twilight years.
“If the proposed changes are passed in Parliament, young Australians will be given greater opportunity to consolidate their super accounts and reap the financial rewards that come from fewer fees.
“However, the onus is on account holders to make the most of the new super rules and to regularly check their account and take action where required.
“If you’ve accumulated four different accounts with separate employers over the years, it’s time to consider consolidating. Don’t let your hard-earned savings be depleted from paying fees across different accounts. A smart decision now means more savings in your future," she says.
Difference in fees paid for a 25-year-old earning $60,000Source: finder.com.au, moneysmart.gov.au