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Extend super objectives to post-retirement
Any statement of objectives for superannuation should also extend to the retirement incomes system, according to Chartered Accountants Australia and New Zealand superannuation specialist, Liz Westover.
Westover has sought members' views on the policy outlook for superannuation, particularly in light of the recent Federal Government's tax discussion paper which she said had finally opened the door to a holistic look at taxation in superannuation.
She said the constant amendments and announcements over many years by successive governments had long been recognised as a significant contributor to undermining the confidence of Australians in the super system.
"While this Government appears to remain committed to a hand's off approach to super [for now], it is timely for a wholesale review of the tax implications within the super environment," Westover said.
"It won't be an easy discussion and debate is likely to be, at times, heated."
She noted that, for years, taxation changes had been made with strong linkages to the Government's budgetary pressures of the day but that, more recently comments and concerns have been observed from a number of sources including the Intergenerational Report, the Financial System Inquiry (FSI) report and the tax white paper itself.
"We have an ageing population, heavy reliance on the age pension, a super system currently valued at nearly $2 trillion and what many believe, an unsustainable system in the long-term. The placement of concessions in terms of equity and fairness has been highlighted by many," Westover said.
"While I believe these must be considered, we must also understand that tax concessions are designed to drive certain taxpayer and consumer behaviours. There is no point directing tax concessions to low income earners if they won't be utilised, particularly if that removes incentives to middle and higher income earners to provide for their own retirements when they are the ones most likely to be self-sufficient in retirement [and therefore not reliant on age pension]."
"I am a big supporter of the FSI recommendation for developing a set of objectives for our super system, although I think this needs to be extended to include our retirement incomes system. If we can be clear about what we want from our system for Australians in their retirement, then proposed settings for taxation in super can be assessed against meeting those objectives."
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