Today we released the updated Retirement Income Simulator for the 2016-17 financial year. There were no changes to the calculations, just parameter updates as follows:
Depending on the outcome of the election and how far the Coalition super package gets, we may need another legislation-driven release in the next few months.
The one other thing we changed in this release was the living standards improvement margin. This is the amount added to price inflation to give:
We have reduced this margin to 1%, so that our long-term estimate of community wage growth is now 3.5% p.a. This is consistent with Mercer Investment Consulting research into wage expectations. The visible outcome of this change in the RIS is that estimates of future super amounts are now higher in today’s dollars than they were before. In recent times our expectations of investment returns have been falling as well; this change brings wage growth into line with expected returns.