The former chair of the Commonwealth Superannuation Schemes, Peter Reynolds, has called for the government to adopt an asset-based dividend method to enhance all retirement balances and government revenue.
In a submission to the Retirement Income Review, Reynolds said upfront tax on super was crippling retirement income.
“The upfront tax limits the potential of the super scheme by reducing the superannuation guarantee (SG) to 8% of ordinary time earnings before investment (e.g. a $10,000 SG is reduced to $8,500). This configuration of taxes reduces the return to individuals and government,” he said.
Reynolds said a more effective system would be an annual asset-based fee or dividend of 1.25% on the super pool of funds in accumulation mode.
“This approach redistributes the tax burden from the earlier years of accumulation to the latter years. In so doing, it enables greater wealth to be created for all participants with the greatest benefit flowing to low income earners and those with low balances,” he said.
“The dividend method would increase and stabilise government revenue with a predictable compound growth rate of 7% per annum for the next 15 years.”
Reynolds noted it would also simplify the super scheme with government revenue requiring only one calculation per annum on the mandated 30 June balance of each super account.
Source: Peter Reynolds
The figures are based on an estimated current tax revenue of $30 billion. A dividend of 1.25% from an asset base of $2.4 trillion (accumulation mode) would yield the same amount.
Future Group is set to take on nearly $1 billion in funds under management (FUM) and welcome more than 100,000 new members following two significant successor fund transfers.
Insignia’s Master Trust business suffered a 1.9 per cent dip in FUA in the third quarter, amid total net outflows of $1.8 billion.
While the Liberal senator has accused super funds of locking everyday Australians out of the housing market, industry advocates say the Coalition’s policy would only push home ownership further out of reach.
Australia’s largest superannuation fund has confirmed all members who had funds stolen during the recent cyber fraud crime have been reimbursed.
Pardon my ignorance; more information please. Is it a Fee or Dividend …… and, there is still only 100 cents in the dollar. Very confusing.