On Tuesday, 9th May 2017, the Government released its Federal Budget for the 2017-18 financial year.
We have again prepared a fact sheet outlining the main super changes proposed in the Budget along with a commentary on how those changes may impact AvSuper members.
The impact for you
As expected, and in contrast to previous years, the Federal Budget did not include a lot of direct changes for superannuation. However, the housing affordability measures proposed by the Government may impact on super funds and relevant members.
Some of the key changes include
- being able to contribute additional money resulting from the sale of a family home once you are over 65
- being able to use some non-compulsory super contributions towards a home deposit in the First Home Super Savers scheme
- an increase in the Medicare levy to 2.5%
- creation of a single body to manage financial industry disputes
The scope of the proposed changes is such that different groups of members are likely to be impacted in different ways so it is important to review the Budget, and the related legislation as things progress, in line with your personal situation.
Before making major decisions about your super and/or retirement income stream, please remember these changes are not yet law and may well be altered and delayed. We suggest you get personalised advice from our Member Advice Consultants to better understand your options and their implications.
2017 is the 20th anniversary of the Australian Mothers Day Classic, and the 10th year of AvSuper sponsorship for this worthy event.
We are inviting all our members (and anyone else!) to register for the event as part of the AvSuper team – you can walk with us in Canberra or in your local area, or make a donation to support the team if you can’t make it on the day. By doing this, you help support research into breast cancer through the National Breast Cancer Foundation.
Together, let’s walk all over breast cancer!
Registrations are now open at www.mothersdayclassic.com.au/register/ – don’t forget to add yourself to the AvSuper team!
The AvSuper team wishes all members a happy and safe Christmas and a prosperous 2017. Thank you for your support this year. We are looking forward to even more opportunities to help you maintain and continue to build your retirement savings next year.
We also wanted to let you know that the AvSuper office will be closed for the Christmas/New Year break from the afternoon of Thursday, 22 December 2016. We will reopen on 3 January 2017.
During that time, you will be able to
- access our website as usual
- login to AOL (AvSuper Online) at any time to check your account, adjust your personal details or make an investment switch
- email us with any super questions or to request an appointment with one of our Member Advice Consultants
- leave a message on our answering machine or via AvChat or our ‘let us call you’ button
We will respond to any messages once our office reopens.
2016 US Election Results
Wow, the mainstream world didn’t see a Trump presidency coming.
Most polls indicated a win by Hillary Clinton, but the media seem to have western politics all wrong this year starting with Brexit. There is a general feeling that people want and need change, and they will vote for whatever can bring about that change. So the road ahead looks rocky and uncertain, but have your fears from yesterday just been played out today? We wait and see.
At AvSuper, we maintain that rises and falls occur in investments all the time in reaction to world events, company forecasts, natural disasters and human disasters. These events can initially shock us, but over time, opportunities arise, we rebuild and strengthen and grow from the experience. This is no different from the volatility markets witnessed with Brexit back in June this year. For all investors, it is important not to react to panic and be irrational; instead, remain clear and focussed on your long term goals, avoid reacting emotionally and always seek professional input from your adviser.
Remember, selling or indeed switching your investment options in response to sudden falls in markets can just lock in an investment loss and reduce your capacity to make those losses up in future. The noise generated through the media can make adherence to long term investment strategies difficult, we understand this. So, stay strong and keep your eyes open (alongside your financial advisor) as often such scenarios throw up opportunities.
What are the potential economic implications?
At face value, Trump’s policies come with many economic and market uncertainties.
Much of the potential impact hinges on Trump’s ability to implement his planned tax cuts and his intentions regarding trade. The tax cuts could provide a meaningful boost to growth via higher consumer spending and business investment, but would also likely to lead to a large increase in the budget deficit. Higher infrastructure spending would also be beneficial for growth.
His plan to deport illegal immigrants could place upward pressure on wages but also lower growth as the population and workforce contract. Trump’s trade policies would be expected to dampen international trade and growth, with a magnified impact on emerging markets given their greater reliance on international trade as a source of growth.
What are the potential implications for growth and markets?
We’ve seen some analysis which highlights the potential inflationary impact if Trump’s policies are implemented. Any boost to growth from tax cuts, upward pressure on wages from deporting low-wage illegal immigrants and higher prices of imports from any imposition of tariffs would be inflationary and place upward pressure on interest rates and bond yields.
A key risk for the global economy is a trade war if a Trump Administration imposes tariffs on Chinese goods, which could lead to retaliation. Any reduction in global trade volumes is likely to be a have a meaningful negative impact on global growth.
In summary, in the short term, tax cuts and higher infrastructure spending could provide a boost to growth and ‘risk’ assets such as equities, while the uncertainty and negative market reaction to Trump’s election could further defer additional rises in interest rates by the Federal Reserve.
However, over the medium term, if implemented in full, Trump’s economic policies could reduce US and global growth which would be negative for ‘risk’ assets, including equities. The impact on interest rates and bond yields is unclear given the conflicting forces of lower growth but higher inflation. Given that full implementation is considered unlikely for political reasons, the overall impact on growth and investment markets will be dependent upon which policies are ultimately implemented and to what extent.
Should I change Options?
Superannuation is a long term investment, here at AvSuper we are riding this current wave of volatility with cautious optimism.
Everyone is at different stages in life in terms of meeting retirement savings objectives. Before you make any decisions in changing investment options be sure to speak with our Member Advice Consultants, who are qualified financial advisors, if you think you need assistance.