Titled Financial performance of Australia’s superannuation products, the report was recently released by the Financial Services Council.
According to the report “Australia’s system appears to be ‘middle of the pack’” compared to overseas pension systems. The analysis included twelve pension systems worldwide and found that “Australia has the third highest returns”.
John Brogden, CEO of the Financial Services Council, has announced that the FSC is going to begin work on a national retirement income policy.
“We must embrace the opportunity and lead the debate on taking superannuation from a world class accumulation scheme to the world’s best retirement system”, said Mr Brogden.
He went on to say that the superannuation system must not only provide an income in retirement to “a majority of Australians”, it must also take “intergenerational pressure off the budget”. If the super system fails to achieve these goals the “system and policy has failed”.
The FSC plans to work with “our members, business leaders, community organisations and others” to develop a policy, called the “National Retirement Outcomes Policy”.
Previously the ATO had revealed that in March 2014 3,000 letters had been sent to taxpayers who the ATO suspected of being involved in a dividend washing arrangement. Of these 3,000 original letters approximately 1,300 have “responded by coming forward to make voluntary amendments under which the franking benefits obtained from dividend washing transactions have been removed from their tax returns”.
Now the ATO will be sending letters to 500 of these taxpayers who did not respond to the first letter, along with letters to a further 1,500 based on “updated data analysis” by the ATO. These letters will “ask those taxpayers to self-amend their tax returns in order to reverse franking benefits they may have obtained from dividend washing transactions”.
According to ASFA, in the forth quarter of 2013/14 the cost of a ‘comfortable retirement’ rose 0.5%, to $58,128 per year. To fund this would require a superannuation balance of around $510,000 for a couple and $430,000 for singles, based on ASFAs calculations.
To arrive at these figures ASFA has assumed that people “do not retire before qualifying for the Age Pension” and that they will receive at least a part Age Pension.
A large portion of the increase in the cost of retirement was due to the rising costs of medical and hospital services, “which occurred mainly as a result of the increases in private health fund premiums effective from 1 April 2014” said ASFA.
The Government has issued a ‘statement of expectations’ to many of the regulatory bodies, including the ATO, ASIC and APRA. These statements outline “the Government’s expectations about the role and responsibilities” of the regulatory bodies.
While acknowledging that the regulatory bodies need to act “independently and objectively”, the Government expects that they will “take into account the Government’s broad policy framework, including its deregulation agenda”.
This includes the expectation the bodies will “look for opportunities to reduce compliance costs for business and the community” to contribute to the Government’s $1 billion “red and green tape reduction target”. They are also expected to make a “major contribution to the deregulation agenda and help to boost productivity”.
Statistics published by Roy Morgan show that consumers perceive financial planners branded differently from their actual owners as far more independent than they rank bank-branded financial planners.
All the big four bank’s financial planners rank low for perceived independence by consumers, as Roy Morgan says “the planners belonging to all the major banks and labelled as such are generally understood to be ‘tied’ rather than ‘independent’”:
- CBA 14%
- ANZ 13%
- NAB 12%
- Westpac 11%
- AMP 27%
However consumers view financial planners with different branding, but at least partially owned by the big four banks and AMP, as much more independent:
- Financial Wisdom (CBA) 55%
- RetireInvest (ANZ) 37%
- Godfrey Pembroke (NAB) 50%
- St George (Westpac) 20%
- Charter (AMP) 48%