Fintech Tool To Overcome Early Release Effect

October 29, 2020  by smsmagazine

The effect of early release of superannuation on retirement income balances can be mapped and offset by investment choices, a fintech has claimed.

SMSF members who accessed funds early under COVID-19 relief will be able to map the impact of that withdrawl on their retirement income as well as what changes to their investment mix will offset that impact via a new tool released by a fintech firm.

mSmart flagged the release of the product earlier this year and managing director, Derek Condell, said the new tool – mProjections – would include the facility for people to measure the impact of any change on their superannuation, including amounts accessed under early release.

Condell said the forecasting tool showed probability-based balance sizes at retirement, as well as fortnightly and annual retirement spending levels and could compares the impact of an early withdrawal on forecasts and how that would change if different investment options were put in place.

“Advisers, accountants, planners and fund members will be able to quickly and easily answer retirement questions like around how much they will get, how long will it last and what can be done to improve the result,” he said.

“Most importantly, they will be able to see how they may be able to lift the retirement benefits to pre-withdrawal levels without putting in extra funds.

Condell said the results of mProjections analysis can be used to estimate the effect on a fund of COVID-19 related withdrawals and how it can be offset by a moving from a low exposure to growth assets of 15 per cent to a higher exposure of 85 per cent.

As a result of this change, mSmart stated a super fund member could have confidence that their retirement benefits will likely be higher in retirement by make a switch with the report reflecting that change in today’s dollars.

“Rather than just showing the effect of the decision to withdraw we also analyse what would happen, after withdrawal, if the Investment Option was changed to a higher level of growth assets, or to a lower level,” mSmart stated.

“At mSmart, we are all ex-industry and we passionately want everyone to have confidence in their financial future. That’s why we created this tailored and affordable report which is accessible online from the mProjections website,” Condell said.

Earlier this year, he claimed concerns about the impact of early release of superannuation on retirement income balances had been overestimated and was lower than expected in many cases.