Was ISA inflating its super release impact figures?

29 April 2020

Key Federal Government back-benchers are claiming vindication after a senior Treasury official suggested Industry Super Australia (ISA) may have overstated the long-run superannuation balance effects of people taking early hardship access of up to $10,000.

The Government back-benchers including Victorian Senator and former IPA staffer, James Paterson and NSW Senator and former Financial Services Council policy director, Andrew Bragg, have highlighted testimony given to a Senate select committee by the Treasury’s head of retirement income policy, Robert Jeremenko.

Senator Paterson pointedly asked the Treasury official about the validity of ISA’s claim that a 30-year-old who withdrew $20,000 over the next two years would have $97,214 fewer dollars in retirement savings by age 67.

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Paterson suggested that this figure was substantially higher than indicated by ASIC’s MoneySmart calculator.

Jeremenko said the reason was that the ISA was using “nominal figures, rather than real”.

He suggested this was “inconsistent with what the Australian Securities and Investments Commission (ASIC) has told super funds, or anyone who is making public statements about balances on withdrawal of super balances”.

“Generally the well-respected methodology to predict the time value of money is to take into account an inflation adjustment,” he said suggesting that using a “nominal figure gives a larger hit to retirement balances”.

Senator Paterson later used social media to distribute a video of Jeremenko’s testimony, something which was retweeted by Senator Bragg.

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Great to see some politicians finally willing to expose the lies propagated by union super funds. Let's hope they maintain the momentum and turn their attention to other dubious union fund activity such as:
- deceptive advertising
- deceptive product labelling
- workplace misinformation and coercion
- use of member's money to support union activities
- use of shareholder power to force companies to submit to union demands

Disagree on some of this. It would be good if we can have some fair and unbiased commentary.

ISA used a CPI rate of 2%; ASIC were using 4% CPI which deflated their figures (more or less, this was the difference).

Which do you think is more realistic?

ISA figures are more accurate IMO- I am sure if any adviser did the research on it they would agree. Using a long term rate of return less than 2% higher than inflation that ASIC used is asinine.

It is based on a range of assumptions, it is anyone's guess who is right in this sense and we can only wait and see.

It's all speculation. Do they factor in another pandemic, a world war, a recession we had to have, etc etc. If they can predict a $ figure for 30 or 40 years time why didn't they know this virus was coming? Why the pleading for a bailout by taxpayers, why the illiquidity, why caught with their pants down?? Superannuation is a rort! All smoke and mirrors! All fast talking spivs out to feather their own nests. Make it voluntary, then those who believe in goldilocks can put their money into this ponzi scheme if they want to and leave the hard working Aussie to handle their own money and no-one else can tell you whether you can have it or not.

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