Super and financial services measures: SGC increase delayed, caps, FoFA, etc

Prior to the election, the Coalition promised not to make any detrimental changes to super. In its Superannuation Policy document, the Coalition reiterated its pledge "not to make any unexpected detrimental changes to superannuation". The Coalition said it was committed to Australia's 3-pillar retirement system: an aged pension as a safety net, a compulsory system of retirement saving through superannuation, and incentives for voluntary saving.

The Policy document also said that the Coalition would include superannuation in its proposed inquiry into the financial system "so that the integrity of our superannuation system will be able to withstand future challenges".

Coalition policy promises concerning superannuation and financial services are summarised below.

 

Coalition promises on super and financial services

Measure

Reference

SUPERANNUATION

SGC: superannuation guarantee will increase from 9% to 12%, but gradual increase will be delayed by 2 years, so that the 12% target is achieved in 2021 rather than 2019.

Superannuation Policy.

Super cap breaches: Coalition will "work with key stakeholders in the superannuation industry to develop an appropriate process that addresses all inadvertent breaches of the contribution caps".

Superannuation Policy.

Concessional caps: Coalition will revisit concessional contribution caps and incentives, such as super co-contributions, for lower income earners "once the Budget is back in a strong surplus".

Superannuation Policy.

Minimum withdrawal amounts from account based pensions: Coalition will conduct a review of the minimum payment levels to assess their adequacy and appropriateness.

Superannuation Policy.

Low income super contribution: Opposition will discontinue the low income superannuation contribution (given it is part of the MRRT package which the Coalition intends to repeal).

Budget Reply speech, 16 May 2013.

Default super: The Coalition says it will allow any MySuper product to compete freely in the superannuation default fund market, in order to ensure there is genuine competition in the superannuation default fund market.

Senator Cormann's address to FSC Annual Conference 2013, 1 August 2013.

Employer reporting: Coalition will streamline employer superannuation reporting and cut red tape by implementing a superannuation clearing house through the ATO. Small businesses could remit compulsory super payments made on behalf of workers directly to the ATO.

Superannuation Policy.

Income stream products: Coalition will review the regulatory barriers currently restricting the availability of relevant and appropriate income stream products in the Australian market.

Superannuation Policy.

PPL and super: Coalition's paid parental leave scheme will pay superannuation contributions at the compulsory superannuation rate based on a woman's actual wage.

Superannuation Policy.

Info to fund members: Coalition will improve the quality of information available to super fund members, for example:

  • standard reporting of fees;
  • standard reporting for gross and net returns on individual investment options; and
  • comparable definitions for asset classes and investments.

Superannuation Policy.

Corporate governance: Coalition will align corporate governance in superannuation more closely with the corporate governance principles applicable to ASX listed companies.

Superannuation Policy.

Military super: Coalition says it will "deliver fair indexation to military superannuants". Defence Forces Retirement Benefits (DFRB) and the Defence Force Retirement and Death Benefits (DFRDB) military superannuation pensions will be indexed in the same way as aged and service pensions.

Superannuation Policy.

FINANCIAL SERVICES

FoFA: Coalition says it will review the FoFA amendments. It is concerned about over-regulation and the compliance costs imposed. It says it would amend FoFA to "reduce compliance costs for small business financial advisers". Coalition says it will implement all 16 recommendations it made in its dissenting report to the Parliamentary Joint Committee inquiry into the FoFA Bills. These changes will include:

  • the complete removal of Opt-In;
  • the simplification and streamlining of the additional annual fee disclosure requirements;
  • improving the Best Interest Duty;
  • providing certainty around the provision and availability of scaled advice; and
  • refining the ban of commissions on risk insurance inside superannuation.

Senator Cormann has indicated the Coalition already has these legislative changes drafted. ASIC has indicated it will administer the FoFA laws as they currently stand until the Coalition's proposals become law.

See 2013 WTB 31 [1397] and 2013 WTB 30 [1360]. Coalition Productivity and Regulation Policy.

Use of the terms "financial planner" and "financial adviser": the lapsed Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 proposes amendments to restrict use of the terms. Coalition said it was sceptical about the amendments, but did not oppose the changes.


Financial systems inquiry: Coalition has committed to conduct a "son of Wallis" root and branch inquiry into the financial system, including a focus on superannuation.

Media release, 13 February 2013. Coalition Productivity and Regulation Policy.

Source: This article was first published in Thomson Reuters' Weekly Tax Bulletin. To subscribe to Weekly Tax Bulletin, or for more information, please:

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