Changes to Superannuation that future you will want to celebrate

We Talk Cents Podcast

The federal government has made some big changes in the super space lately that you'll probably be very grateful come retirement. Dan & Blaize run through all of the changes & also share the 'naughty list' of funds that didn't pass the new bench mark test set by APRA.

The following is a transcript taken from episode 45 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.


Blaize Pengilly  00:09

Personal finance, budgeting, cash flow and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finances. We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor. 

Dan Jovevski  00:45

For more information, please check out Hey everyone, it's Episode 45 of the We Talk Cents podcast today is Monday, the seventh of September, with only four months left the year Can you believe it Blaize? Time is going fast! How are you doing?

Blaize Pengilly  01:04

It is - ah, Dan, I am going super well. Time Is Flying like 2021 - I'm still adjusting to the concept of 2021 To be honest, and now we've only got four months left. So I think I'm getting going to need to be doing some catch up. How are you going Dan? How are you feeling about four months remaining of what we thought was the solution to 2020 but has really just been the extension of a lot of problems that occurred in 2020. 

Dan Jovevski  01:30

I always think to myself, in four weeks time, I'm gonna be going up and down the aisles at Coles and Woolies seeing Christmas decorations. And that scares me how fast that's come around. So it's been a bit of a blur, Blaizey. So I am with you. It's going super quick and can't believe we're going to be looking to 2022 hopefully it's a lot different than 2021. That's for sure. I've got to admit I'm itching to get on a plane and go somewhere that's that's one of my biggest goals is to just get out of Perth for a little bit and explore the world. That's what I'm hanging out for. How about you?

Blaize Pengilly  02:01

Yeah, I yeah, I would just like a lot of people, I would just love to see my loved ones, my friends and family that we know we've been separated for from so long. But you know, let's focus on today's episode, which today I'm really excited as always, because we're talking about the future right now that next year, but we're talking about future you and changes to Super that senior you will want to celebrate. So we've got that to look forward to. But before we get into that, and before we talk about the news, @moneysavvymamma on Instagram got in touch off the back of the episode we did last week about side hustles. And how's this? She said that for her side hustle, she flips things. And she loves finding things on the side of the road to sell, which I also love because you know what? You're finding something for free that would go to landfill, and then you're making a profit off it. I don't see any like it's only a it's a win win situation, right? So she sent us a message in and said that one day, she saw a really big slide, a 10 minute walk up the hill from her house on the front verge. So she waited until her kids went to bed. And then she went back to collect. And she was dragging all by herself this huge slide 10 minutes up the hill to get to her house. And her hubby thought she was crazy. But she sold it and made 30 bucks for nothing except for a lot of grunt work and arm power. How good is that?

Dan Jovevski  03:25

Man that is super cool. Look. It's free stuff that you're selling and you're making some money. I mean, how good is that? I just remember somebody coming to my place and doing that before- and you know when you put stuff on the verge and somebody goes and picks it up. You kind of want it back again. And then you have to convince yourself there's a reason why I put it on the verge - take it, yeah, whatever. So yeah, good. I know that sounds awesome.

Blaize Pengilly  03:47

Yeah, having that it's not we talk about buyer's remorse where you get really excited by a product and then afterwards you sort of regret it. It's gift gifters remorse or the Marie Kondo remorse of going I've gotten rid of something and well now now that it's desirable to somebody else, I guess it's all comes down to economics supply demand, the whole thing. 

Dan Jovevski  04:05


Blaize Pengilly  04:06

And just a reminder, if you want to get in touch with us, you can reach us anytime on Instagram, just like @moneysavvymamma did. So our handle is @getwemoney and there's a link in the show notes. Now, Dan, let's talk news. What this week has caught your eye.

Dan Jovevski  04:23

Nothing beats good news headline from We Talk Cents podcast than chucking in something about buy now pay later...

Blaize Pengilly  04:28

Ah of course, we do love buy now pay later news.

Dan Jovevski  04:33

Well a recent survey by Mozo indicated a third of shoppers prefer using buy now pay later as their preferred payment mechanism, which is pretty incredible. And 42% of the users report having a buy now pay later account for over three years, and 20% have begun using this service within the last 12 months. That's pretty interesting. Maybe we're awakening some dormant buy now pay later people that have signed up. But a really interesting stat is that 60% of shoppers use the service when they're shopping and physical store is essentially down from a peak of 25%. Which is super interesting that actually decrease in it could probably have something to do with the pandemic and lockdowns potentially. But it could also mean that more people are probably using it online.

Blaize Pengilly  05:17

16% - Yeah, you know, I think I think the decrease of people using it in store would definitely surely I mean, I don't actually know because I didn't do the stats myself and I'm not a statistician or a researcher. But surely, I'm going to say that the pandemic has had a massive effect on this, because there are just so many stores that are locked down. And you know, we all know when lockdown hits the urge to online shop hits, so itches. Wait, is that the how the saying goes when? I mean, I'm making the saying up right now. But when lockdown hits the urge to online shop, itch hits? Does that make sense? I'm gonna roll with that.

Dan Jovevski  05:59

Blaize let's hope it takes off.... What else have we got on the news?

Blaize Pengilly  06:03

Okay, so we talked about this last week, but it's too important to ignore. And so I really wanted to bring it up again. We talked about the gender pay gap last week, and how it increased to 14.2%, which represents $261.50 per week difference between the average weekly wage of a man versus a woman, so men earning more, and we did talk about it last week, but I wanted to bring it up again, because on the 31st of August, last week, we had Equal Pay Day. Now, for those of you that don't know, which was me a few days ago, Equal Pay Day is a day used to mark the 61 additional days from the previous financial year, that women have to work to earn the same pay as men. Like you think about - so long ago, we did our episode on the new financial year, that was back on the first of July. And then you think, almost 2, well, 2 months in a day later, is how many more days women would have had to work to receive the same pay as men, which is, like we said last week, frustrating. And I just thought it would be important to highlight again. There was a stat on the Equal Pay website that just needs to be shared. And it's that every industry in Australia, every single industry in Australia has a full time pay gap favoring full time working men, even in female dominated industries, such as healthcare and social assistance. Like every single industry, that is not a single industry, where women earn more than men on a full time, weekly basis, which I mean, it's just so frustrating and Australia, we need to do better, it's it's not good enough.

Dan Jovevski  07:54

Well, Blaize coming off the back of that, I think where people can get involved, i mean the stats are pretty harrowing. But I think I like about where this website links to is you can go to the Workplace Gender Equality Agency website, there's actually a pay calculator in there that you can use, and your organization can use. So if people really want to find out how that affects their own organization, or potentially any, you know is anybody is a senior listening into this podcast, maybe you know, giving that a go and having that look at to see how your own organization stacks up. Might be a good place to start. But it's pretty harrowing numbers Blaizey, and keen to see this change and converge. I think I asked you this question last week, but in terms of you know, where, where some of the recommendations are going from this article is where do they think they can help out to to close the gap?

Blaize Pengilly  08:42

Well, I think the main things are you know, building awareness and yeah gaining leadership commitment. So that can be top down so it can come from leadership or it can come from the bottom up it can be it can it can come from the the organization demanding that they raise it an equity pay issue. So, yeah, there's, there's lots of things that can be done. Awareness is a huge part of it. But also change can be made. If you're a CEO, I mean, heck yeah, lead - run, lead the calls, run with it, run, you know, be the flag bearer for us. And if you're you know, not not the CEO on an organization, you can still demand it - you can raise it with your human resources, or whoever it is, your manager. But yeah, I think awareness and having the discussions is definitely a fantastic first step to to lessening the gap.

Dan Jovevski  09:31

Awesome Blaizey. Was there anything else that's caught your attention?

Blaize Pengilly  09:34

There was one final thing that it just made me laugh. 'Car Park Operators Face Lockdown Havoc' was an article I saw on Sydney Morning Herald. And it was about airport car parks suffering due to lockdown because no one's paying their extortionate fees to park their car there to travel. And, you know, it just made me laugh because I think the amount of fines that I have got and the amount of money I have forked out that seems very very unreasonable for a simple carpark space - I'm like its, I feel like it's a little bit rich coming from the carpark operators the second that they're suffering, understand that it's a business. But my personal gripe as someone who has received too many parking fines in her life. It just made me laugh and go - really? Are you really suffering that badly?

Dan Jovevski  10:19

Tell me about Blaize. And part of me is with you there with, you know, the extortion of our airports take from you, but you think that all the hidden costs that are hidden by going to the airport, I mean, paying, you know, $25 for lunch? God forbid you have a beer on top of that, you know, you're almost not going to find change from a pineapple, as they say. And God forbid you want to park your car there overnight and probably pay like 150 bucks. So I think, look, it's it's a business model that's obviously gonna suffer during the pandemic. But yeah, it's it's super interesting now that people are going to be traveling soon they're going to be travelling internationally all that much. And these businesses are going to figure out how they survive the how they survive COVID. Maybe they should consider doing something else they like, you know, having a rave on a Friday and Saturday night and turning it into a night club. I don't know, there's plenty of crazy things. Don't just think about parking a car, guys!

Blaize Pengilly  11:15

Yeah, that's a great idea. So each car park bay, you can have like a little isolated dance cubicle, everyone gets their own little bay - I think you are seriously onto something we should pitch it. 

Dan Jovevski  11:26

Let's do it.

Blaize Pengilly  11:27

Carpark rave pivot. Alright, that's enough of carpark raves, put your put your glowsticks away and your dancing shoes away Dan and let's chat changes to Super Let's do it Blaizey. Okay, Dan, we've discussed super before, but the super superannuation has been in the news so much lately. And I feel like there's been a lot of changes. So let's cover off everything that we need to know about what's changed in Super, and how seeing you you will be celebrating hopefully, because of the proposed and the changes that have happened currently. So Dan, very brief overview remind us exactly what super is.

Dan Jovevski  12:09

Well superannuation was a product of the 1990s. So back then we would have thought about cassette players and VHS tapes and the like, but the Labour government in the early 90s, in 1992, introduced the solution where instead of you having to squirrel away money by yourself and put that into a savings or retirement account and hopefully wake up at the time at 60/65 and enjoy the bounties of your savings - The reality is that most people don't do that. We kind of live paycheck to paycheck, or we certainly did the 90s. And the government said to themselves, what can we do to really help people have a forced savings mechanism that will allow you to put some money away and not be able to touch it until you reach retirement age. So that was a simple concept. And it's been a tried and trued and tested staple of Australian life. So if you're an employer, you've got to pay superannuation to people 18 years old and over that are paid more than $450 before tax in a calendar month. And most people that are working part time or full time now are going to be receiving that superannuation tax contribution.

Blaize Pengilly  13:19

So if you're employed you pretty much getting super But if you are not employed to get a freelancer, like myself, you pay your own super.

Dan Jovevski  13:28

That's correct. Yeah, if you're so if you're self employed, or you work for a business, and you pay yourself things like dividends and things like that, it really is up to you whether or not you want to make your own voluntary superannuation contributions.

Blaize Pengilly  13:41

Okay, great. If you have -  if you're curious about super and more about how it came to be and the sort of issues in the structuring of the system, we dive in, we go into a lot of depth about it in Episode Six, where we talk to Helen Hodgson from Curtin University in detail about it. And if it's something that interests you, I highly recommend you listen back to Episode Six, because she talks about all the issues with how the gig economy is now more of a job structure and how women were sort of not really thought about when it comes to Super and about how women take off time for childcare. So highly recommend you listen back to episode six, and I'll check the link for that in the show notes. So then let's talk about the changes that have happened in Super recently. I saw a list come out last week, it was a it was the naughty list of super accounts about funds that failed in the super test. What is the test? And who made the list? Who was on the naughty list?

Dan Jovevski  14:40

Well Blaize. I can't believe that the government is getting to the point of really - I think they're doing a lot of good things. We've talked about backing before and now they are putting people in naughty list. But before we get into that, I just want to say how incredible this is, right? Because you know, as Australians, we have sort of woken up our employer, more or less has told us to sign a piece of paper. But we've signed it, we've accumulated five accounts. And we've got all these superannuation funds. To be honest, I've never even met a person that works in the superannuation fund industry in my entire life. There's like a secret squirrel business, but they're managing over a trillion dollars of all these hard earned savings - 

Blaize Pengilly  15:19

A Trillion?

Dan Jovevski  15:19

And it's about more than a trillion. $1.7 trillion worth. I know, it's monumental. And when you think about that, you know. Isn't it about time that we really uncovered, you know, who's performing well, and who is not performing well? So I think it's number one, I just want to commend the government here for this awesome initiative. Before we get into that, let's talk about what the test is. So the Federal Government launched the Your Future, Your Super reforms where APRA, the Australian Prudential Regulation Authority test each Superfund for their performance annually. Now some of those super funds will either pass or fail the test. This legislation came in this year on July 1. And it's designed to weed out those under-performers to make sure that as these get the most out of their super, and it's got the super funds shaking in their boots. Now, you're probably wondering what happens if they fail? Well if they fail the test, the fund must send a letter to their members to let them know they have underperformed and failed the test. I mean....

Blaize Pengilly  16:24

They have to own up!? They have to put their hands up and say oh, sorry, we really didn't do that well...

Dan Jovevski  16:30

This is just something else. This is the pressure now that's on the superfund managers to actually meet the benchmark perform I think is pretty good. The days of this murky industry operating in the darkness are gone. And I wonder what how people will feel when they get this letter in the mail saying their supervisor has underperformed. And just so people are aware, if people are thinking, How do I switch my superannuation fund? Or how do I consolidate, wrap up my superannuation funds? Well, the government has also come to the rescue here. Right now, if you go into MyGov, you can find using your tax file number, all the super funds that you've contributed to it, if you've got like four or five of them, you can wrap them up into one provider's account. So it's never become easier to switch a superannuation provider, I'd imagine there's probably gonna be a lot of switching activity if these letters start flooding into the mail.

Blaize Pengilly  17:22

Normally, I like to ignore those kind of official looking bits of email or window letters as my dad likes to call them - ones that are clearly official business. But it sounds like the kind of letter that you wouldn't want to miss where they go - Oop sorry. guilty, we have really not done a very good job this year, you should consider switching.

Dan Jovevski  17:42

100%. I'm even thinking, if the government mandated that the envelope actually says "your super fund has underperformed", it probably will encourage people to open the letter rather than to to not open it, Blaize. But the letter must be sent within four weeks of a thorough assessment. So if any of the super funds get the big F the big red stamp, they've got to let you know within a month, which is pretty good. And a letter must notify the member that switching superannuation funds could resolve the member saving 1000s of dollars more in retirement.

Blaize Pengilly  18:13

Wow. Okay,

Dan Jovevski  18:14

I mean to add salt to injury. I mean its saying that your competitors -  Please hurry up, get out of our super fund, go to your competitor because you're gonna have more money and you're gonna sip more pina coladas at age 65.

Blaize Pengilly  18:27

I love this. Do you know what this reminds me? So they're encouraging you to what is it refinancing or switching providers like we've discussed in relation to many things before whether it be credit cards, home loans, personal loans, car loans, or now superannuation they're saying, hey, find a better product because you could be saving yourself more money. I guess this is similar to open banking, where, you know, the government is doing things to make finances be more transparent for the benefit of the consumer. And I am all about it.

Dan Jovevski  19:01

Absolutely. Just a very quick interruption! The We Talk Cents podcast is produced by WeMoney. WeMoney is a smart money management that gives you the ability to see all your financial accounts in one place. You can even track your net worth and see that on a beautiful graph. This week, we've released a net worth graph, so you can see all your accounts, your assets, your liabilities, your property value, hate and even your crypto. So why don't you give the WeMoney app a go? Head to the Google Play store or the Apple App Store and use the referral code podcast to earn five bucks when you connect an eligible account. And the best thing is the app is free. Now back to the show.  As a show Blaize, I don't think we like to name and shame for the sake of it. But I think our listeners should be aware that this is a government endorsed program. It is a government list that is publicly available that people can look at in their own time. So we have to make mention of some of the funds here and I will pick a few out because I think some of the bigger ones you know will surprise a lot of people that if you are part of this fund, you may be looking at getting a letter in the mail, you may have received it already. And some of these funds are pretty big right? So the Colonial First State First Choice Superannuation Trust. I mean, Colonial State, you've heard these ads on TV, you probably know who they are. It's a big fund that I've seen there that I've recognized -  BT now, you know, part of the Westpac group, I believe, that's this super MySuper product, which is been caught out as a under performer.

Blaize Pengilly  20:31

Oh, my gosh, I switched from them last year when I actually switched my super I am so relieved that I did now.

Dan Jovevski  20:37

Amazing. Amazing. That is. That's good. That's excellent. You got out before they got caught out. That's that's really cool. 

Blaize Pengilly  20:44

Before I got the letter.

Dan Jovevski  20:45

I know it's amazing. And for the poor employees working at Asgard, which, I mean, the irony here is, Asgard is a type of financial planning service, part of I believe the Westpac group, and the fact their employees are receiving a letter saying the order performing, I think is, you know, a little on the well, I wouldn't say humorous side, nut certainly, you know, a little bit ironic that people in the financial planning industry recommending superannuation funds have an underperforming fund. So Asgard employees, maybe it's time to switch out and find yourself, you know, a better fund.

Blaize Pengilly  21:26

Yeah, if you want to see the full list of the 13 funds that failed. There, the list is available on the APRA website, and I'll also pop a link for it in the show notes. Fingers crossed yours isn't one of them. But you know, it's super easy to switch if it is. So you can find yourself a better deal.

Dan Jovevski  21:44

Australians who are eligible for superannuation will be pleased that as of July 1 this year, the mandatory rate of superannuation payment from your employer has increased from 9.5% to 10%, for one year. May not seem like a huge difference, but it can really add up over the long run. Blaizey, you've done some math.

Blaize Pengilly  22:03

I did. You know I love the Money Smart compound interest calculator. So I thought, you know, do a jump of the super guarantee from 9.5 to 10% doesn't seem like a lot, like point five of a percent really doesn't seem like a lot, right. But when you put it into the compound interest calculator, you can actually see how much of a difference it makes. So I did the maths based on the most recent stats that have come out, which is that the average Australian salary is let's say it's $67,901, let's say 68. To make it easy. If you were on this salary, you would usually, at the rate of 9.5% be accruing $6,450 a year in super. After 30 years of investing into your super at the estimated annualized returns of 7%. That would grow, your total savings would be $658,000, which is huge. And $458,000 of that would be interest, which is enormous, right? A huge portion of that is interest. But, now with the new super guarantee rate of 10%. Just a small flat  .5% difference, your total savings would be $693,000, which is a difference of $24,000 over a 30 year period, just from .5% of a change. So that small point 5% really adds up over time...

Dan Jovevski  23:32

Wait - that's not all from July 1 in 2021, the Super guarantees legislated to rise by a half a percent in increments each year until it reaches 12% of wages by 2025. So we can expect to see a superannuation increase between 10 to 12% over the next few years. So what does that look like Blaize?

Blaize Pengilly  23:53

Alright, so super guarantee at a rate of 12%, which is what everyone will be receiving, as of 2025. After 30 years using the same maths as before, and the same average income, your total savings would be $831,000. And you'll earn interest would be $579,000, which is huge. So the difference from 10 to 12% of a super guarantee that you'll see that your employer pays results in $138,000 more in your super over 30 years. So 2% may not sound like a lot, but when 2% totals $138,000 that is a 2% that I can get around.

Dan Jovevski  24:41

It's pretty amazing. Well Blaize, that is absolutely amazing. And just a little increment of your rate of Super going up has a monumental impact as you head towards those retirement days. Again, if you have forgotten that you can consolidate your super just head to the MyGov website. If you haven't already, so you can do it, it's pretty simple. And you will be able to see all your super funds that you may have signed up with your tax file number and potentially consolidate them into one fund. And it takes about 10 minutes. So there's nothing to wait. Shut off this podcast get onto your MyGov, get logged in and just see how much you could potentially be saving on these excessive fees that you're paying all this advance and God forbid that you received that letter in the mail, letting you know that your fund is underperforming.

Blaize Pengilly  25:28

Yeah, for sure. I consolidated my super last year - super easy to do. Yeah, login to my Gov highly recommend. And then it's a little bit of a bittersweet goodbye from us today, because we are taking ah two weeks off to kick back, relax and focus on some other things. So we'll be back online on the 27th of September. So we hope you enjoy the break, don't miss us too much, we will certainly be missing you. But we have some really exciting things planned for when we come back. And if you are ready to dip your toe into the world of investing, then you definitely want to be joining us when we come back. Because we have some really, really big news and something we've been putting a lot of work into preparing for those that are wanting to trial investing, and really get into the investing into the whole world of investing.

Dan Jovevski  26:20

And the biggest favor that you can give Blaize and I is head to the Apple podcast website. And please leave us a review. If you love the show and you think somebody else could benefit from listening to We Talk Cents, then hey, why don't you just send them a link and share a topic that might be of interest to help them with their financial lives.

Blaize Pengilly  26:38

We'll even give you a shout on the show. So thank you to Jess and Tracy who have left a comment saying how much they appreciate the show. We love having you listen! That's all from us for now. We'll catch you in a couple weeks time. Stay safe, stay well and we will see you then! 

Dan Jovevski  26:54

See ya!

Blaize Pengilly  26:54




The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.


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