Cbus’ Performance

Cbus continued to benefit from the Australian and global economic recovery during the March quarter.  As at the end of April, the Cbus Core Strategy (default option) return for the financial year was 11.59%. However, Australian and overseas share markets fell in May and Cbus Core Strategy’s return for the financial year to date ending May is estimated to be around 8.0%.

Globally and in Australia, investors were reacting to renewed concerns that government debt in several European countries (Greece, Ireland, Portugal and Spain) could slow down the global economic recovery.

While market commentators continue to be cautiously optimistic of economic growth in Australia, we can expect volatile markets for a while yet, as share markets here and overseas remain sensitive to any debt related news. The gradual withdrawal of government stimulus packages, put in place to prevent prolonged recession after the global financial crisis, may also mean further volatility as markets adjust.

THE HENRY TAX REVIEW  – What it means for Employers

The Government recently announced proposed changes to Australia’s superannuation system.  The changes are a result of its response to the Henry Tax Review.

There are four changes which, if implemented*, will impact superannuation:

1. Superannuation Guarantee (SG) contributions to increase from 9% to 12% by 2020
2. SG age limit to increase from age 70 to 75
3. Low income earners will receive a Government contribution of up to $500
4. Members over age 50 with less than $500,000 in super can contribute up to $50,000 in before-tax (concessional) contributions, such as SG and salary sacrifice.

In terms of changes to the super system it’s generally good news.  New savings incentives will help working Australians further build their superannuation nest eggs while inequities in the current system have been addressed to help low income earners and those nearing retirement achieve better outcomes.

When would this happen?

Employers will be interested in the timing of these proposals:

1.  Increase in the Superannuation Guarantee. This will be phased in over a 7 year period from 1 July 2013, as shown in the table:

2.  SG Age limit increased. From 1 July 2013, employers will be obliged to make SG contributions on behalf of workers until age 75 (currently the age limit is 70).

3.  Annual super bonus for low income earners. Employers will not need to do anything.  From 1 July 2012; employees earning less than $37,000 pa will receive a bonus payment of up to $500 per year, depending on the amount of concessional contributions made during the year.  The payment will be made directly into the person’s superannuation account.

4.  Concessional contributions cap extended for over 50’s. Again, employers will not need to do anything.  From 1 July 2012 workers with account balances under $500,000 will continue to be allowed to receive concessional contributions of up to $50,000 pa to their super (which includes SG payments made by your employer and salary sacrifice).

*These changes are not yet ‘law’.  Further information is available from www.futuretax.gov.au

NEW FORM FOR EMPLOYERS

Employers would be aware that they need to give eligible new employees a “Choice of superannuation fund: standard choice form”.  Cbus has developed a new form which is available for download from the website www.cbussuper.com.au/forms-publications/employers or by request from Cbus on 1300 361 784.