Giving you more say in your super? Not likely with these changes

The government is introducing a raft of changes to the regulation of superannuation in a bid to give consumers more power over their retirement funds. But, in fact, consumers are unlikely to use these new powers and the changes might not improve super fund performance.

The headline change introduces annual general meetings (AGMs) for superannuation funds. Previously these weren’t commonplace, as they are with companies. The government proposes these meetings will help fund members hold superannuation fund trustees and executives to account. Read more...

What Australia can learn from the New Zealand retirement system

The Australian and New Zealand retirement systems both feature public pensions and private superannuation. But there are things to learn from the differences between the two systems. While Australians may end up with more savings in retirement, New Zealand’s system is simpler and offers more freedom.

In Australia, contributions to the superannuation system are both compulsory and higher, and you cannot make withdrawals or stop contributing except in exceptional circumstances. The Australian pension is also better targeted at those with greater need. 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...

Despite superannuation changes, one tax loophole remains

The Howard government, when flush with revenue, made a bad tax decisions which continue to haunt current policy makers. It removed the tax on the retirement phase of superannuation, this has been partly resolved by current government’s recent changes. But the Howard government also replaced the full taxation of real capital gains with concessional treatment of capital gains (only 50% of gains taxed). This remains as a tax avoidance loophole which both parties acknowledge but are reluctant to act upon. The Conversation 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...

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...

The superannuation myth: why it’s a mistake to increase contributions to 12% of earnings

The Conversation, superannuation, non-super savings, savings outside super, retirement savings, 12% superannuation guarantee, mistakeSo much of the national conversation about superannuation simply assumes that “savings for retirement” is synonymous with “superannuation savings”. This is a big mistake.

This mistake partly explains why we got into such a mess with excessively generous tax breaks for super. It also underlies misguided plans to increase superannuation contributions to 12% of earnings.

Super doesn’t equal retirement savings

Any sensible conversation about superannuation policy must start by recognising how households save for retirement, and why. Read more...

A super test for Australia’s political system

The Conversation, superannuation, Budget 2016, Budget 2016/17, LaborIn the past week, both major parties have made welcome, albeit tentative, commitments to tackle much-needed budget repair. The Turnbull government has moved quickly to lock in budget savings that Labor supported in the federal election campaign. Now Labor has signalled its support for the bulk of the government’s proposed changes to superannuation tax breaks, while proposing some extra budgetary savings of its own.

The ALP has endorsed the main elements of the government’s package of reforms to super tax breaks. It has accepted the government’s moves to tighten the annual cap on pre-tax super contributions to A$25,000 a year, and to put a A$1.6-million cap on tax-free super earnings in retirement. Read more...

PC sets groundwork for long-awaited look at super competition and efficiency

The Conversation, Productivity Commission sets groundwork for long-awaited look at super competition and efficiency The Productivity Commission has released its draft report setting out criteria for assessing the competitiveness and efficiency of the superannuation system. The final report will be delivered in November this year.

The study, the first stage of a three-stage exercise, is part of the Government’s response to the 2014 Murray Financial System Inquiry. Murray recommended that the Government “introduce a formal competitive process to allocate new default fund members to MySuper products, unless a review by 2020 concludes that the Stronger Super reforms have been effective in significantly improving competition and efficiency in the superannuation system.” Read more...

A competitive superannuation system: will efficiency gains follow?

The Conversation, A competitive superannuation system: will efficiency gains follow? Productivity Commission Will competition in the superannuation system improve efficiency, or is this an ideological argument extended beyond its usefulness? If more competition would promote efficiency, what design and policy issues need to be addressed to accommodate the changes?

The Productivity Commission’s draft report on superannuation’s efficiency and competitiveness seeks to address whether increased competition will, in fact, drive efficiency, or whether this proposal is ideologically driven by either a belief in the free market or a desire to weaken the role of the unions in industry superannuation funds. Read more...