Peter Costello has told the 2014 ASFA National Conference that most people will have to rely on both superannuation and the age pension in retirement.
“Let us bear in mind that for most people, occupational superannuation will not free them from the pension,” Costello said.
These were his personal comments, rather than in his position as Chairman of the Board of Guardians of the Future Fund.
Costello also discussed the issue of superannuation funds receiving refunds of franking credits, which was raised in the Financial System Inquiry (FSI) interim report. While he doesn’t think changes to these arrangements will feature in the final FSI report Costello does say “it is likely to be under consideration in the Tax White Paper.”
Peter Costello said that both the concessional tax treatment of superannuation contributions and income can be “justified on the grounds that they are assisting people to save for their retirement and when you bear in mind that the Government will get substantial benefits back when, later in life, it claws back the Age Pension, it is not such a bad deal to the Government.”
Instead of simply counting the cost to the budget, any debate over these tax concessions must take into account the later savings in age pension payments.
Costello also said that the superannuation industry’s support for increase to the super guarantee rate was driven by self-interest.
“Why would any sane person not support a legislated increase in their stream of revenue? Personally I would love to get a legislated revenue stream into the Future Fund.”
Instead super funds should concentrate on “delivering the best return” for their members.”
“If they do exceptionally well they might even convince members to make voluntarily contributions to the fund,” said Costello.
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