Addressing an FSC member webinar on Thursday, Jane Hume said last year’s Retirement Income Review had revealed that although the Australian super system was “up there with the best in the world”, there were still improvements to be made.
“For eight years the government has been chipping away with reforms to super to make our system more efficient,” she said.
“Since inception our system had been inflexible for those who have taken career breaks and worked part time, and it’s also been inflexible for older Australians who haven’t enjoyed the benefits of a mature system.”
In an about-face from the Coalition’s 2016 budget that put unprecedented restrictions on the amounts individuals could contribute to super over their lifetime, the government this year opted to relax a number of restrictions on contributions for pre-retirees and those already in retirement, including removing the work test and opening up downsizer contributions to those aged 60 and over.
“Around 22,000 individuals, more than half of those women, have made a downsizer contribution since 1 July 2018,” Ms Hume said.
“The AFR has also looked at the supply side of this and reported that around 76,000 people were expected to downsize over the next five years.”
Ms Hume said the government’s decision to remove the $450 a month income threshold would also improve fairness in the system for predominantly women workers in lower-paid, part-time roles as a result of taking time out from full-time work to raise children.
“Women currently retire with 22 per cent less super than men – one reason for this is the structural inequities baked into the system since inception,” she said.
“The removal of the $450 per month income threshold will improve economic security for 200,000 women, including those who have low incomes and work in part-time employment.”
Ms Hume added that a number of the government’s reforms to financial services would also benefit advisers, including the two-year amnesty for legacy retirement products and the establishment of the single disciplinary body within ASIC.
“The government is giving Australians more choice to convert legacy retirement products to more flexible products – for two years, product holders will have the use of all their super savings to start new products,” she said.
“This will benefit advisers, administrators and product providers by reducing their operational risk.”
Stop lying Jane. It’s a [b]fourth[/b] disciplinary body, not a single disciplinary body.
Hume & Frydenspend’s ridiculous Hayne2 annual fee renewal legislation couldn’t be more inflexible if they tried. If a low income fund member wanted to do a 5 yearly support fee for $50 a month, & then renew 60 months later, why not? Informed Consent has virtually nothing to do with an annual time frame. Working families have better things to do than to muck around with pointless red tape paperwork.
How about tackling the inflexible financial planning system that your party is destroying????
Partly true about women except to say that if she is married she is obviously a beneficiary of her husbands super, if she divorces she gets half at least of the husbands fund or if single she is probably in a position to work and accumulate super as well.
Exactly. “Womens super” is just an identity politics issue. Why don’t we hear about “womens bank accounts”? Because bank accounts are usually joint. When you work through the real world practicalities, super ultimately is too.
For those who remain married, yes, their husband’s super is treated as a joint asset to support them both in retirement. Unfortunately, all too often I have seen divorces where the husband keeps his super, and settles the marital home on the wife instead. The wife then ends up asset rich and cashflow poor, with no way of adding to super and an asset that generally does not appreciate in value the way the super will. When she reaches retirement, she then has to sell that asset to use the equity to prop up her own retirement savings.
Well, sounds like you would prefer, on divorce for the male to get the home and the female the super. That way at least the male has somewhere to live. Perhsps your arguement vould really be better solved spending more on that wonderful profession – lawyers.
At it’s core, it might be the best in the world, 10% of all salary goes in, it is controlled by the people, it is taxed concessionally. But by god it is complex isnt it? So many stupid little rules that the govt could just fix. Regardless of what we advisers are going through, the average person is too nervous to make even a small financial decision without advice. Jane and co keep going off on tangents fixing things that arent broken, meanwhile in other parts the wheels are falling off. 🙄
MIA Hume is fixing useless little things as she, LNP, ASIC have no idea how to untie the killer Gordon’s Knot they have strangled the Advice Industry in.
Some time ago it was suggested that super and retirement come under a committee that was apolitical and the committee members would have a tenure of five years per time. This could be staggered to ensure experience and new blood is a Constant.
The idea of this committee is that it would be separate to the political football approach that has been in play for many successive governments.
Super would be a constant with the rules for say 5 years.
Given we now live in an ethical world, it should not contain any current members of political parties, superfund executives, FSC, etc.
It should align public servant and pollies super with those from the real world.
If the FASEA model has taught us anything, it would be to avoid inherent conflicts (think academics etc) on committees.
Nice in theory – but who appoints the committee? I actually don’t mind super being political because it gives everyone a chance to vote and kick our terrible ideas. It’s a given that 10% goes in, that’ll never change so at the moment I feel like we are in an Ok spot.
Does anybody know whether pre 20/9/2007 term allocated pensions (50% assets test exemption) are included in this reform and can be converted to normal super or commuted?
I think so.
Based on the info in my inbox today it seems to be for SMSF trustees only who purchased lifetime products within their fund. Not for APRA regulated funds.
SMSF Association gave an excellent webinar on this topic yesterday and will be providing updates to its members. You should ask an SSA adviser as its a technical area with lots of traps.
who will advise these clients in the future? Industry funds, Banks, robo advice, local members of parliament???
Members of parliament RGP. That’s where I’m sending everyone who needs advice that I can no longer help, due to excessive red tape. Not just their local member though, also their senators.
The removal of the $450 per month threshold will do nothing. So what happens now? A local kid who works once a fortnight at the local cafe and gets $100 for his days work gets $9.50 in super? Fees won’t cut into that too much? At $450 a month you are looking at $42.75 per month into super, that is making negligible difference.
Pity there wont be enough licensed advisers left over the next 5 years to help all these intending downsizers out.
Don’t worry though. There will be a horde of academically qualify people to assist who will have zero empathy for the person(s) who has(have) spent 40 years accumulating wealth because they were lucky. No benefit at all because they made wise choices as to when to save and when to spend.
So all of the things the LNP have done over the past 10 years to completely balls up the system are now being undone and they’re takinhg credit for it. You couldn’t make it up.