The Australian community wants to be given plenty of notice, and a reasonable transition period, when it comes to the Government making any major changes to the superannuation system, according to the results of the ASFA White Paper consultation, Vision for Sustainable Super, released today.
Based on the results of submissions received from the general public, surveys and research conducted by ASFA, the consultation also found Australians recognise that our system is world-leading, and therefore many do not have an appetite for major changes. Instead, minor improvements were suggested, particularly to help ensure the system remains sustainable into the future, and to accommodate the budget demands of an ageing population.
While the vast majority of respondents favoured continued access to lump sums, imposing a tax on them, over a threshold, was one area of hot-topic debate, with 56 per cent of the online submissions to ASFA indicating they were in favour of access to lump sums, at the time of retirement being tax-free. Respondents were also in favour of the Government using various incentives to encourage people to save more for their retirement.
Interesting suggestions from the general public included:
- making it compulsory to include member projections of likely income-stream outcomes in retirement on superannuation statements
- taxing accumulation and pension-phase earnings equally at 15 per cent, to ensure generational equity
- providing tax and social services advantages to people who invest in lifetime pensions or deferred annuities
- treating super lump sums as assets for the purpose of Centrelink for five years after they are taken
- taxing benefits as assessable income, noting this would still allow most individuals to take income tax free in retirement
- restricting the amount of a lump sum withdrawal to the amount of non-concessional contributions made to a person's superannuation account.
A number of broad and diverse views were also received from industry participants, particularly when considering the introduction of a lifetime caps on contributions, with some suggesting a rolling annual cap be implemented over a three to five year period. The issue of defaulting members into an income stream upon retirement was also raised with some submissions in favour of this, while others were firmly opposed, due to concerns with respect to consumer sovereignty and practicality of administration.
ASFA CEO Ms Pauline Vamos said the take-home message for policy makers is that the Australian community is more engaged with their superannuation than ever before.
“The Australian community appears to have grown tired of the constant speculation regarding proposed changes to the system and they want stability and certainty when it comes to planning for their retirement. It has truly become the community's system, which means it is increasingly important to make sure the community is on board when it comes to making major changes to the superannuation system.
“The diversity of views expressed by the industry highlights the importance of all sectors and stakeholders to work collaboratively, in order to make sure we overcome our differences and work together to deliver the best outcomes for fund members,” Ms Vamos concluded.
For further information, please contact:
Lisa Chikarovski, Media Manager, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia's superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation whose aim is to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.