Instrument 2022/603 exempts providers of superannuation calculators and retirement estimates from certain financial product advice regs if comply with relief conditions.
Providers must present super forecasts in today’s dollars and default to converting future dollars using specified inflation rates unless users input different rate.
Default inflation rates reflect nominal wage inflation while a user in the accumulation phase (4% p.a.), consumer price inflation while user in retirement phase (2.5% p.a.).
AST ASIC proposes lowering the default nominal wage inflation rate from 4% to 3.7% p.a., matching the revised long-term forecast in the 2023 intergenerational report.
Adjustment reflects a significant economic change in long-term wage growth forecasts.
AST ASIC does not propose changes to other relief parameters, including the default consumer price inflation rate, following consultation and actuarial advice received.
It proposes a transition period until Dec. 31, 2024, in order to provide time to adjust.
Providers can choose to use existing default nominal wage inflation rate of 4% p.a. or revised rate of 3.7% p.a. when converting future dollars to today’s dollars under relief.
Starting from Jan. 1, 2025, the revised default nominal wage inflation rate of 3.7% p.a. will become mandatory for all providers relying on the AST ASIC relief.
During the transition period, AST ASIC will update its retirement and superannuation calculators on Moneysmart website to reflect revised nominal wage growth rate.
Effectiveness
Submissions on proposal must be submitted by 12pm (AEST) on Aug. 2, 2024.
Amends 2022/603 to ensure the default rate of inflation used to calculate present values in 2022/603 reflects the current long-term forecast of nominal wage inflation.
The amendment instrument commences on Sep. 11, 2024 (day following registration).
Sep. 13, 2024 Default Rate Finalized
On Sep. 13, 2024, AST ASIC updated default nominal wage inflation rate to 3.7% p.a..
All submissions agreed with the rate and one suggested extending transition period.
Providers of superannuation calculators and retirement estimates shall update the default inflation rate by Dec. 31, 2024; the revised rate will apply from Jan. 1, 2025.
On the same day, AST ASIC updated RG 276 superannuation forecasts accordingly.
