AFA chief executive Brad Fox said the impact of the Budget measures – which at a high level are designed to spread the load of reducing the Budget deficit across nearly all adult Australians – will hit welfare recipients and middle income families hardest.
“These families will have less disposable income and this may affect their ability to afford vital personal insurance,” Mr Fox said.
“They may also have less capacity to fund financial investments, reduce personal borrowings or make additional contributions to super,” he said, adding that for Australians born after 1965, who are seeking the freedom to retire before age 70, there is now a compelling reason to build assets outside superannuation.
“The age at which people born after 1965 can access the age pension is being lifted to 70, so we may see the preservation age – that is, the age at which people can access their superannuation – also raised to 70 in subsequent budgets,” Mr Fox said.
“This is one of the most compelling reasons yet for Australians to get financial advice on how to build investments outside the superannuation environment.”
Reductions in spending on ASIC and the ATO announced in the Budget may also have implications for the financial advice industry, Mr Fox said.
“As financial advice continues its progression towards becoming a universally recognised profession, the opportunity for greater self-regulation will increase,” he said.
“Reduced funding for ASIC, as the regulator of financial advice, may provide further impetus to bring this forward.”
The AFA expects the Financial System Inquiry to provide further opinion on the appropriateness of self-regulation.
