Reforms to Australia’s super system have been announced that will be considered by Parliament after the Federal election in September 2013.

If legislated, the proposals will impact many super fund members before and after retiring. Below is an overview of the key proposals and how they could affect you.

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I read a comment that you need $50 million just to say hello to a private banker in Geneva Switzerland or New York, but Australia’s considerably younger private-banking industry is rolling out the red carpet to new clients for much less.

So from a prestige sense, have you ‘financially arrived’ when you receive an invitation to join an Australian private bank, do you actually get an invitation or is it all just a bright ribbon wrapped around a standard bank offering?

Is the service offering worth the additional fees and charges?

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Australian economic growth continues to power along, with the latest figures showing 0.6% growth for the December quarter, delivering Gross Domestic Product growth for 2012 of 3.1%. The biggest contributors to this were mining (+0.9%), financial and insurance services (+0.4%) and social assistance (+0.4%).¹

The interest rate cuts by the Reserve Bank of Australia (RBA) last year appear to be impacting consumer sentiment, which has recently shown signs of improvement.² Since May 2012, the RBA has reduced the cash rate from 4.25% to the current level of 3.00%.³ Consumer confidence is at the highest level since December 2010. Business confidence, as measured by the monthly NAB Business Survey, also shows signs of recovery. NAB indicated that this was attributable to a number of factors including: improved financial markets; avoidance of the fiscal cliff; recent rate cuts and strengthening Chinese economy.

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Super Guarantee Changes

On 2 May 2010, Federal Treasurer Wayne Swan announced an increase in the Superannuation Guarantee (SG) rate from 9.0% to 12.0%. Last year, this became law and will be effective from 1 July 2013.

This measure will significantly increase future retirement incomes for Australian workers through the gradual increase in the superannuation guarantee (SG) rate to 12.0%.

The SG rate will be increased gradually with initial increments of 0.25% on 1 July 2013 and on 1 July 2014. Further increments of 0.5% will apply annually up to 2019-20, when the SG rate will be set at 12.0%.

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Major changes to aged care are underway and should be in full swing by mid 2014, with the focus on care in the home.

The Federal Government’s Living Longer Living Better reform package is aimed at encouraging older Australians to receive help in the home. Almost $1 billion will be spent over the next five years to increase the number of in-home care places by 40,000 to almost 100,000.¹ The reforms are good news for retirees who require care but would prefer to continue living at home. In many cases finding the money to pay the bond for an aged care facility can be a complex task, sometimes involving the sale of the family home.

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On Wednesday the 23rd, the US House of Representatives voted to suspend discussions on the US debt ceiling until May (2013). By doing this they averted a potential US default but also bought some more time for extended budget negotiation between the parties.

The subsequent Bill now goes to the US Senate where it is expected to pass and then be approved by the newly re-elected President Barack Obama (Democrat), defusing tensions between the Democrats and Republicans as they continue to negotiate on how to rein in US deficits and debt.

While this is not the preferred outcome as global markets must now wait until May, it is a positive note coming off the back of successful negotiations around the US Fiscal Cliff which we reported upon in the December update.

So what is the “debt ceiling” and why does this impact global markets in such a manner?

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The current global economic environment is showing signs of stabilisation, however there are inherent risks and issues to be contended with to achieve future growth.

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In today’s complex world and even more complex family structures, best practice would suggest that all Estate Planning is conducted as a joint professional service by your Financial Adviser and Lawyer. In the instances where higher net worth clients are involved, it would also be prudent to involve the client’s accountant as well.

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After a seemingly endless campaign and $6 billion worth of political spending, Americans voted to re-elect President Obama, keep Congress more or less the way it’s been and continue the divided government that’s been in place for the last two years.

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Investment market’s focus on Europe has continued to dominate headlines over the past quarter with Spain now replacing Greece on centre stage. Sovereign debt and banking issues of these countries, together with nervousness of the recent Greece elections, led to falling markets in May and early June. Since then, share markets have strengthened as each of the European spot fires has been extinguished.

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