The Rudd Government has just passed its first six months. It’s been busy pushing through an ambitious first-term agenda and dealing with a rapidly changing economic environment. So what’s been achieved on the super front and what needs more work? Here’s AIST’s Mid-Year Super Report Card:
Go to the top of the class:
We welcome the government’s broad commitment to lift savings and the inclusion of retirement incomes policy in the formal announcement of a tax review. We are also pleased the government has foreshadowed some immediate objectives around simplicity including: Intra-product advice within superannuation; a shorter standardised PDS with a requirement for plain English including on-line disclosure and calculations of end benefits in today’s dollar terms.
These are all good measures that will go some way in making super more user-friendly. We also welcome the focus and additional funding for infrastructure announced in the Federal Budget, while the reviews of the self managed super fund sector and the regulation of credit ratings agencies and research houses are timely and warranted.
Government moves to remove discrimination against same sex couples in relation to super are equally desirable although we need to ensure they go further than those in the Public Service.
Room for improvement:
During the Federal Election, home affordability was a key issue. With affordability at record low levels, the new Government has been anxious to help more Australians afford to buy and rent a home. The Government’s responses have been the First Home Saver Account, and the National Rental Affordability Scheme.
AIST has made submissions on both these initiatives, with a number of our recommendations on the FHSA being picked up. The requirement that FHSAs can only be offered by super funds through a separate trust remains a disappointing feature of the policy. And while AIST welcomes the funding for the Clearing House concept there are some challenges involved in this proposal, notably around arrears collection.
We also need to ensure strict timelines are in place at each step – from employer , to clearing house, to super fund, to members account. The Productivity Commission inquiry into paid maternity leave is another welcome initiative but any scheme must include a superannuation component. Failing that, AIST is calling on the Government to support a ‘Super Baby Bonus” to compensate women for lost superannuation during their career breaks to raise children.
More homework needed: