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Superannuation guarantee to stay at 9.5% until July 2021

Government changes to legislation mean that the superannuation guarantee is likely to stay at 9.5% until 1 July 2021, and only reach 12% in July 2025.

The Government made a deal with the Palmer United Party to pass the repeal of the Minerals Resource Rent Tax. As part of the deal the LISC will be kept for a couple more years, but increases in the superannuation guarantee will be further slowed.

Read More »Superannuation guarantee to stay at 9.5% until July 2021

Growing confidence in superannuation system: survey

Growing confidence in superannuation system - surveyA recent survey of super fund members has found widespread support for the superannuation system, though there is increasing concern over some issues.

According to the second FSC/ING Direct Superannuation Sentiment Index 86% of “Australians support superannuation” and 83% say “superannuation is essential to providing a comfortable retirement”.

However only 56% of “Australians trust superannuation”.

Read More »Growing confidence in superannuation system: survey

Stop changing superannuation rules, says CBA

CBA stop changing superannuation rules, Financial System Inquiry (FSI)CBA says it “believes that, in the interests of promoting choice and competition, the superannuation and portability settings should not change”, according to the bank’s second submission to the Financial System Inquiry.

Instead the current superannuation rules should be allowed to “mature” and then be re-evaluated after five years, according to the submission.

While sharing the view of the Inquiry that the “the retirement phase is underdeveloped and does not meet the needs of many retirees”, CBA argues for minimal changes.

Read More »Stop changing superannuation rules, says CBA

Treasurer wants power to set superannuation guarantee rate

Treasurer  - Minerals Resource Rent Tax repeal superannuation (MRRT), superannuation guarantee, low income super contribution (LISC)The Government has introduced a bill to the Parliament which would give the Treasurer the power to set the superannuation guarantee rate by legislative instrument.

This is contained in the Minerals Resource Rent Tax Repeal and Other Measures Bill 2014, which is the third attempt to repeal the MRRT, change the rate of the super guarantee and repeal the Low Income Superannuation Contribution (LISC).

On Monday, first the Government moved to set aside the second MRRT repeal bill, after the Senate insisted on keeping the LISC and the currently scheduled increases in the super guarantee. Then at 12:36 pm the new bill was introduced to the Parliament, by just after 2:00 pm it had passed the House of Representatives.

Read More »Treasurer wants power to set superannuation guarantee rate

Superannuation should not include leverage, says RBA

RBA superannuation leverage Financial System Inquiry (FSI)The RBA has used its second submission to the Financial System Inquiry to argue that the superannuation system should not involve leverage.

Borrowing by Super Funds

“The compulsory and essential character of retirement savings implies that it should remain largely unlevered,” said the RBA.

As the “general absence of leverage in superannuation was a key source of resilience in the Australian financial system during the financial crisis” the RBA supports the observation in the Financial System Inquiry (FSI) interim report that “leverage by superannuation funds may increase vulnerabilities in the financial system”

The RBA also notes that borrowing by SMSFs to buy property could “act as an additional source of demand that exacerbates property price cycles”.

Read More »Superannuation should not include leverage, says RBA

Overturn the recent amendments to FoFA, says AIST

AIST FoFA, SMSF borrowing Financial System Inquiry (FSI)The Australian Institute of Superannuation Trustees (AIST) have used their second submission to the Financial System Inquiry to argue for a return to the original FoFA reforms and a ban on borrowing by super funds.

FoFA

AIST makes a number of recommendations relating to the recent and proposed changes to the Future of Financial Advice (FoFA) reforms, including:

  • “That the recent amendments to FoFA be overturned”
  • Reinstating the “primary requirement to take into account the member’s best interests”
  • Prohibiting the “provision of general advice over the counter without any account of the customer’s circumstances”

Read More »Overturn the recent amendments to FoFA, says AIST

SMSFs shouldn’t be prudentially regulated, says APRA

APRA prudential regulation SMSFs, superannuation borrowing Financial System Inquiry (FSI)In its second submission to the Financial System Inquiry APRA has argued against the prudential regulation of SMSFs and against direct leverage by superannuation funds.

No prudential regulation of SMSFs

While saying that there is a “strong case” for the prudential regulation of the currently APRA-regulated super funds, APRA said “that does not extend to self-managed superannuation funds”.

Given that SMSFs involve the members also being the trustees, or the directors of the corporate trustee, APRA says that the “interests of members and trustees are naturally aligned”.

“The cost of prudentially regulating SMSFs would, simply by virtue of the sheer number of such funds, be substantial and significantly outweigh any benefits,” said APRA.

Read More »SMSFs shouldn’t be prudentially regulated, says APRA

No minimum balance requirement to set up SMSF, says ASFA

ASFA minimum SMSF balance, Financial System Inquiry (FSI)The Association of Superannuation Funds of Australia (ASFA) has used its second submission to the Financial System Inquiry to argue that there shouldn’t be a minimum balance required to set up an SMSF, that SMSF trustees can decide if costs are too high, and that direct borrowing by super funds should be banned.

Limits on establishing an SMSF

“ASFA does not consider that there should be any specific limitations on the establishment of SMSFs being imposed,” said the submission. ASFA said that a minimum balance requirement would be “difficult to implement and enforce”.

Read More »No minimum balance requirement to set up SMSF, says ASFA

Current State of Superannuation Changes: August 2014

Superannuation Changes - July 2014Pending Superannuation Changes – August 2014

Super Guarantee & LISC

The Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 [No. 2] was back in the House of Reps on the 26th of August, but it’s still unclear what is going to happen to the Government’s related plan to slow the increase in the superannuation guarantee rate and repeal the LISC.

FoFA

On the 28th of August the House of Reps passed the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, after amendment by the Government to implement some of the changes promised to the Palmer United Party. These changes were part of the deal to get the votes to defeat the disallowance of the FoFA regulations in the Senate. The amendments can be found on the Parliament website here (PDF).

Read More »Current State of Superannuation Changes: August 2014