Calculating the accuracy of calculators
The web calculators provided by superannuation funds and other financial institutions to attract and retain members aren’t always all they are cracked up to be, according to research released this month by actuarial firm Rice Warner.
Rice Warner undertook an examination of the various calculators and came up with the following conclusions:
• not all funds update their calculators regularly to keep up with legislative change;
• the diversity of results produced from a given set of assumptions varies widely from calculator to calculator, illustrating the wide range of assumptions and methodologies employed by various calculators;
• the most common type of calculators to appear on websites are superannuation, retirement and combined superannuation and retirement calculators; and
• a small number of calculators do not conform to ASIC requirements, for example, not allowing the user to change default values.
According to the Rice Warner data, there can be a substantial variance in the results of projected account balances at retirement age provided by the calculators and, interestingly, the calculator provided by the Australian Securities and Investments Commission appears to fall in the middle of the range.
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