Changes to superannuation insurance won’t jack up rates – but if anything they don’t go far enough

The life and disability insurance offered by superannuation accounts can be the best possible deal for members. But the experience is often bitter for younger people, who are “opted in” to insurance they won’t need until they have dependants, face administrative hurdles to opt out, and are often charged fees and premiums through multiple super accounts. Many see their small balances disappear entirely.

The latest federal budget proposes to turn this system around by making superannuation insurance opt-in for people younger than 25, and on accounts that are inactive or have a balance of less than A$6,000. However, the changes don’t address a more pernicious type of superannuation insurance – total and permanent disability (TPD) insurance. Read more...

Angry at Labor’s imputation credit refund policy? Blame Costello

Opinion: Many of the recent policy changes impacting superannuation and retirement planning – including the ALP plan to stop refunding imputation credits – have been a complicated and confusing attempt to wind back tax concessions, and a fair share of the blame for this can be apportioned to the actions of Peter Costello when he was Treasurer.

Labor leader Bill Shorten last week announced the policy of stopping refunds of dividend imputation credits from 1 July 2019, assuming the ALP wins the next Federal Election and the measures makes it way through the Parliament. Read more...

2018/19 Pre-Budget submission: Superannuation & SMSFs

This 2018/19 pre-Budget submission makes several superannuation-related recommendations, including prioritising the legislative objective of superannuation, repealing the ‘work test’ and indexing the LISTO to Super Guarantee rate.

Prioritise legislative objective of superannuation

Before further changes to superannuation are made priority should be given to enacting the objective of superannuation.

The Superannuation (Objective) Bill 2016 has not been debated in the Parliament in over a year. In the most recent sitting of Parliament every Government superannuation Bill, except the Objective Bill, was scheduled for debate. It is incongruous with having an objective of superannuation, one to which statements of compatibility are to be published, to pass all other super legislation before enacting the objective. Read more...

Here’s how superannuation is already financing homes

The federal government is split on whether first home buyers in Australia should be allowed to use part of their superannuation for home deposits. But what the more strident critics miss is that Australia’s superannuation system already channels a significant proportion of retirement savings into housing. The Conversation

It does this not via the traditional route of people buying a house outright, but rather through an indirect channel, by transforming the household’s compulsorily acquired superannuation equity into mortgages from commercial banks and other financial intermediaries. Read more...

The latest ideas to use super to buy homes are still bad ideas

Treasurer Scott Morrison wants to use the May budget to ease growing community anxiety about housing affordability. Lots of ideas are being thrown about: the test for the Treasurer is to sort the good from the bad. Reports that the government was again considering using superannuation to help first homebuyers won’t inspire confidence. The Conversation

It’s not the first time a policy like this has been floated within government. While these latest ideas to use super to help first homebuyers are marginally less bad than proposals from 2015, our research shows they still wouldn’t make much difference to housing affordability. Read more...

How changes noted in the 1992-93 cabinet papers affect our super today

While superannuation changes were debated all through 2016 we were often reminded that the superannuation system is still maturing. Many workers retiring today were not members of a superannuation scheme for much of their working life.

The cabinet papers of 1992-93 released today by the National Archives of Australia give an insight into how, and why, the system was originally designed; and how some of those decisions are reflected in the current policy debate.

A new super scheme

The Superannuation Guarantee came into force from July 1 1992. In that year about 64% of employees had access to superannuation including white collar workers, public servants and workers covered by an award based scheme. Read more...

Submission: Senate inquiry into Superannuation (Objective) Bill

This is a submission to the Senate inquiry into the Bill to set a legislated objective for superannuation.

Thank you for the opportunity to make a submission in relation to the Superannuation (Objective) Bill 2016.

This submission will deal with three issues: the need for broad support for the objective before it is set in legislation, long-term reporting on meeting the objective for superannuation and that both the primary and subsidiary objectives for superannuation should be set in legislation.

A legislated objective for superannuation could be a useful tool setting the direction of policy to achieve retirement goals, or it could be an empty phrase – either ignored or changed to suit the whims of the day. Based on the development of the objective so far it appears the latter is much more likely. Read more...

Submission: Fair and Sustainable Superannuation Bill 2016

Submission to Inquiry into Superannuation (Excess Transfer Balance Tax) Bill 2016 [Provisions] and Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 [Provisions]

Thank you for the opportunity to make a submission to the inquiry into these Bills. This submission will deal with:

  • 1.0 Insufficient time for consultation
  • 2.0 The overly complicated nature of the changes
  • 3.0 Indexing LISTO to increases in Super Guarantee rate
  • 4.0 Welcome extension of time for Transfer Balance Cap transitional relief

1.0 Insufficient time for consultation

I am concerned that insufficient time has been allowed for public consultation on some 500 pages of legislation and explanatory materials. By my count, the time allowed for public consultation on the draft superannuation Bill tranches is as follows (including weekends): Read more...

The government shouldn’t use super to help low-income savers

Compulsory superannuation payments help many middle-income earners to save more for retirement, but super is simply the wrong tool to provide an adequate support for low-income earners. Our analysis shows top-up measures targeted at helping this group save for retirement are poorly targeted and an expensive way to do so.

Australia’s superannuation lobby wants the government to define in law that the purpose of Australia’s A$2 trillion super system is to provide an adequate retirement income for all Australians. The government disagrees: it confirmed instead that the purpose of super is to supplement or substitute for the Age Pension. Read more...

Submission: superannuation reform package – tranche three

Thank you for the opportunity to make a submission in relation to the third tranche of superannuation reform package draft legislation. This submission will deal with two main issues: the insufficient time allowed for consultation and the overly complicated nature of the changes.

Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016

Insufficient time for consultation

More time should be allowed for consultation on the changes to the non-concessional contributions cap due to the recent announcement of the new measures, the substantial reduction in the contribution cap and the complicated nature of the changes – both separately and when combined with changes in the rest of the legislation. Read more...