Sent: 01-12-2009 17:20:01
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Super Projections, Life Tables and More
There are five topics to discuss this week.
a. Superannuation Projections
During this past week Rice Warner Actuaries published their latest Superannuation Projections Report.
They now think that in 2024 the total super market will have a value of $4.3 trillion. In contrast in December 2008 RWA was predicting that in June 2023 the superannuation market would be worth $4.7 trillion.
What are the reasons for this drop? The reasons are many and varied including reduced initial balances, contribution cap reductions and co-contribution changes
RWA are also predicting that SMSFs market share will fall from 31% now to just 24.5% in 2024. They believe that older Australians will become reluctant to run these funds and will likely wind them up and move their money into a low cost super fund. Only time will tell if they are right.
b. New Life Expectancy Tables
You might have heard that the Australian Government Actuary has published the 2005/07 Life Tables.
Our ability to continue to live longer and longer lives continues. For example 20 years ago a 65 year old male (born in the 1920s) could expect to live about 15.4 years. Men currently aged 65 (born during World War II) are expected to live 18.5 years.
The report produced by the AGA contains some very interesting information. For example, higher male mortality between ages 18 to 21 has fallen dramatically in the last five years.
The current tables are very close to those projected for the current period when the 2000/02 tables were published based on mortality improvements over the last 25 years.
It is a feature of our life tables than infant mortality collapsed in the first half of the 20th century. Infant mortality continues to fall but at a slower rate given that dramatic improvements are becoming more and more difficult to achieve.
Mortality for older Australians began to fall significantly in the second half of the twentieth century and continues to fall at a fairly dramatic rate.
c. ABS Life Tables
The Australian Bureau of Statistics has also been busy calculating new life expectancy tables for 2006/08. These tables are very similar to that just released by the AGA.
d. ABS Managed Fund data
The ABS has also released new data for managed funds (non-SMSF super funds, life companies, CMTs, etc).
The data shows an increase in overall assets invested into these vehicles. It also sees some changes in which asset sector is receiving these funds.
I'll have more to say about this and what has occurred with this data since just before August 2007 in a special edition of this email later this week.
e. Finally please consider purchasing a copy of my book about Self Managed Super Funds. You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
Two options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST).
The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.