ob体育

ob体育 proposes to update the rate of nominal wage inflation in (Instrument 2022/603), and Regulatory Guide 276 Superannuation forecasts: Calculators and retirement estimates (RG 276) in view of Treasury鈥檚 revised long-term wage growth forecasts.

Instrument 2022/603 exempts providers of superannuation calculators and retirement estimates (collectively referred to as 鈥榮uperannuation forecasts鈥�) from certain regulatory requirements related to providing financial product advice if they provide their superannuation forecasts within the terms of the ob体育 relief.

When providing superannuation forecasts under ob体育 Instrument 2022/603, providers must present superannuation forecasts in today鈥檚 dollars and must, by default, convert future dollars to today鈥檚 dollars using the prescribed default inflation rates, unless a user has inputted an alternate rate.

The prescribed default inflation rates reflect nominal wage inflation while a user in the accumulation phase (currently at 4% p.a.), and consumer price inflation while a user is in the retirement phase (2.5% p.a.). These rates respectively align with modelling in the (IGR), as well as in the , and the current midpoint of the Reserve Bank of Australia鈥檚 target range for consumer price inflation.

To ensure that the default inflation assumptions in Instrument 2022/603 continue to reflect long-term economic conditions, ob体育 proposes to revise the prescribed rate of nominal wage inflation in ob体育 Instrument 2022/603 and RG 276 from 4% p.a. to 3.7% p.a., aligning the default rate with the long-term forecast of nominal wage inflation in the . The long-term forecast of nominal wage inflation in the was revised to 3.7% from 4% in the 2021 IGR.

We consider that the reduction of 0.3 percentage points in the long-term forecast of nominal wage inflation in the IGR 2023 evidences a material change to economic conditions for long-term wage growth, and as such, the default rate of nominal wage inflation in ob体育 Instrument 2022/603 and RG 276 should be revised accordingly.

We do not propose further changes to other relief settings, including to the prescribed default rate of consumer price inflation (CPI). These settings were the subject of a consultation in Consultation Paper 351 Superannuation forecasts: Update to relief and Guidance and ob体育鈥檚 response to the issues raised in that consultation is set out in Report 731 Response to submissions on CP 351 Superannuation forecasts: Update to relief and guidance. ob体育 also sought advice from the Australian Government Actuary on key actuarial issues before finalising its relief instrument settings.

Consultation and transitional arrangements

Industry is invited to provide feedback on ob体育鈥檚 proposal to update the default wage inflation assumption in ob体育 Instrument 2022/603 and RG 276, and on the transitional arrangements by 12pm (AEST) on 02 August 2024 to [email protected].

ob体育 proposes a period of transition to 31 December 2024, recognising that providers delivering superannuation forecasts to consumers in the 2024 calendar year may need time to make updates. Up to 31 December 2024, providers can adopt either the existing default nominal wage inflation rate (4% p.a.) or the revised rate (3.7% p.a.) when converting future dollars to today鈥檚 dollars if a provider is relying on the ob体育 relief.

From 1 January 2025 the revised default nominal wage inflation rate of 3.7% p.a. will apply.

During the transition period, ob体育 will update the retirement and superannuation calculators featured on its Moneysmart website, including to reflect the nominal wage growth rate of 3.7% p.a.

Background

Superannuation forecasts are tools that can be used to help some members think about how superannuation can be part of their retirement income. They can be provided in the form of a superannuation calculator, which is not personalised to any particular person but allows users to input their own information, or as a retirement estimate, which is generated by a superannuation trustee using data it has about its member.

A retirement estimate is provided to a member in the form of a fixed statement (a 鈥榮tatic retirement estimate鈥�) or a statement provided through an interactive tool that allows members to input or change certain assumptions (an 鈥榠nteractive retirement estimate鈥�).

ob体育 has provided longstanding, conditional relief from Australian Financial Services (AFS) licensing and personal advice requirements in the Corporations Act 2001 for providers of superannuation forecasts.

In 2022, ob体育 released updated relief in (Instrument 2022/603), and Regulatory Guide 276 Superannuation forecasts: Calculators and retirement estimates (RG 276), which introduced a single framework for setting economic and financial assumptions in superannuation forecasts.

ob体育 set some standardised assumptions that trustees and other providers relying on the relief must use as defaults that a user can change in a superannuation calculator or interactive retirement estimate, including default inflation rates that must be used to convert estimates to their present value.

In RG 276, we say that we will review the default inflation rates and amend ob体育 Instrument 2022/603 if we consider there has been a material change to economic conditions for long-term inflation assumptions.

ob体育 has consulted the Australian Government Actuary on our proposal to update the default rate of nominal wage inflation.

ob体育 will review the relief settings in Instrument 2022/603 ahead of its scheduled repeal on 1 July 2027.

ob体育 offers consumers a range of resources relating to superannuation and retirement through the . ob体育 aligns the assumptions in the Moneysmart superannuation and retirement calculators, so they are consistent with the settings of ob体育鈥檚 relief.

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ob体育 is Australia鈥檚 corporate, markets and financial services regulator.

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