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Don't break super insurance nexus
People should be able to continue use retirement savings to acquire insurance within superannuation, according to specialist actuarial firm, Rice Warner.
In a submission responding to the Government's Tax White Paper discussion brief, Rice Warner acknowledged that the recent Financial System Inquiry (FSI) had suggested the objective of superannuation should be, "To provide income in retirement to substitute or supplement the Age Pension".
It said this statement precluded the use of superannuation for purposes other than providing retirement incomes, but noted there was "already one major diversion of retirement savings for the provision of insurance within superannuation".
"This is worthwhile as it has greatly enhanced the level of life and disability cover within the community at a reasonable cost," the submission said.
"We would suggest that the value of sustaining this insurance framework should be recognised in setting objectives for the system".
However, in doing so, Rice Warner warned against the use of superannuation for other purposes such as assisting young people to put down a deposit on a home or paying health costs in the retirement.
"As we know that projected superannuation benefits will be inadequate to deliver a comfortable lifestyle in retirement for many members, it is not practical to extend the use of superannuation to these other purposes," the submission said.
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