Lower minimum super pension drawdowns: Actuaries Institute

superannuation minimum pension drawdownThe current minimum superannuation pension drawdowns “reflect annuity factors that at one point would have been very conservative, but are now too high for retirees investing in government inflation linked bonds due to the low real return on such bonds,” according to the Actuaries Institute.

Instead the minimum pension drawdown limits should be “determined as the amount required to purchase a level real income payment throughout life.”

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FOFA regulations should be made by legislation

FOFA regulations - legislationA parliamentary committee has said the recent FOFA regulations should instead be made by legislation. This is the view of the Standing Committee on Regulations and Ordinances, in a recent report.

The government argues in the explanatory materials for the FOFA regulations, the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014, that the changes should be made by regulation because:

“This approach provides certainty to industry and allows industry to benefit from the cost savings of the changes as soon as possible.”

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FSC calls for new body to oversee financial advisers, the ACSB

Financial Services Council (FSC) - ACSBThe financial advice industry has been split over an announcement by the Financial Services Council calling for a new regulatory body.

“The Financial Services Council is advocating for the establishment of a statutory, independent, Advice Competency Standards Board (ACSB) for financial advisers to rebuild the trust of consumers in financial advice,” said FSC CEO John Brogden.

“Self-regulation is no longer a credible option for establishing higher standards.”

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RG 146 is not enough education for financial advisers: SPAA

RG 146 minimum education financial advice, SPAA, co-regulationSPAA has recommended that the educational standards for financial planners needs to move beyond RG 146 and the industry should adopt a co-regulation model.

These recommendations were made in a submission to the Parliamentary Joint Committee on Corporations and Financial Services, which is currently conducting an Inquiry into proposals to lift the professional, ethical and education standards in the financial services industry

“SPAA is adamant that the professionalism within the financial services industry, especially financial advice, needs to be lifted in order to create a robust industry that consumers can trust and engage with confidence,” said the submission.

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Common Reporting Standard shouldn’t apply to SMSFs: SPAA

CRS - Common Reporting Standard & SMSFsSPAA has argued that SMSFs should be exempted from the Common Reporting Standards because they have a low risk of tax evasion and the costs could deter people from SMSFs.

The Treasury department recently conducted a consultation into the Common Reporting Standards (CRS), to which SPAA made a submission. According to the Treasury:

“The Common Reporting Standard for the automatic exchange of tax information is a single global standard for  financial institutions’ collection of financial account information on account holders who are residents in another jurisdiction, the reporting of it to the financial institutions’ tax authority and the exchange of it automatically with other jurisdictions’ tax authorities on an annual basis.”

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Labor & Greens to oppose FoFA amendment bill in Senate

Labor, Greens - Senate FoFA amendment bill - Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014Both Labor and Greens have issued dissenting reports against the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 and have recommended that the Senate not pass the bill.

The Senate had referred the bill to the Economics Committee for consideration. This committee has now given its report and, unsurprisingly, the majority vote of the committee has recommended the passage of the bill.

However Labor and the Greens have both issued, separate, dissenting reports.

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Policy needed to fight short-termism in superannuation: FPA

FPA - superannuation short-termism, Financial System InquiryThe FPA have recommended an independent institution be established to “assess whether the superannuation system is meeting its objectives.”

This recommendation is made in the FPA’s second submission to the Financial System Inquiry, and comes in response to concerns about the lack of direction in superannuation policy, including short-termism.

“The role of superannuation as a pillar in Australia’s retirement income strategy requires a regular, apolitical system of review in order to build public confidence in superannuation as an independent institution”

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Force SMSFs to get financial advice before borrowing: AFA

AFA: Financial System Inquiry (FSI) - require financial advice for SMSF borrowing (LRBA)The Association of Financial Advisers (AFA) have recommended that before SMSFs are allowed to borrow they be forced to seek financial advice.

“It is our suggestion that SMSF’s should need to obtain advice from an appropriately licensed financial adviser before they can enter into a limited recourse borrowing arrangement within the fund.”

This recommendation was made by the AFA in a second-round submission to the Financial System Inquiry (FSI).

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