Restriction of tax cuts to superannuation contributions and the raising of the age at which funds can be accessed to 67 are inevitable regardless of which political party is in power, says Nick Sherry.
Speaking at the CMSF conference in Brisbane, the former superannuation minister said the pressure for restrictions will grow as individual retirement funds grow in size and contributions rise from 9 per cent to 12 per cent.
“It is a nonsense to have a significant difference between the super age and the pensions access age. It is inevitable no matter who is in government that the super access age will be phased in time to converge with the pension access age. If we do not converge the ages people will arbitrage it in order to maximise the age pension.”
Tax restrictions were also inevitable, he warned. “As lump sums grow and we have got the power of 9 and 12-per-cent contributions, over time there will be a set of parameters. Maybe there will be a contributions maximum phased in over time. It is significant change, but the sooner we do it so there is some predictability, the better it will be.”
He added that system would also end up with annuitisation too.
Sherry made the remarks in a panel session at the conference discussing what superannuation funds would look like in 2030.
He predicted that in 17 years time assets under management in superannuation would rise to $5-6 trillion, a rise that would be partly attributable to the population from 22 to 30 million. These assets under management would represent 180 per cent of gross domestic product, up from 100 per cent today. The rise in assets, he said, would force funds to increase the amount of overseas investment from a figure of 15 per cent today to 50 per cent by 2030.
The influence of superannuation funds would grow globally too, overtaking Japan and the UK to become the second biggest retirement pool of assets in the world. Additionally of the top 50 funds in the world, 10 of them will be Australian funds, he said, with assets of $2 billion to $250 billion each.
|Day 2 newsletter from CMSF 2013|
|Day 1 newsletter from CMSF 2013|