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The true cost of super changes
Any changes to superannuation brought down in next week’s Federal Budget have the potential to reduce consumer confidence in the industry while increasing costs for super fund members, according to the head of one of Australia’s biggest dealer groups.
Like many in the financial services industry, Count Financial managing director Marianne Perkovic is waiting for next week’s Federal Budget announcements and hoping that any changes made to the superannuation system won’t create more headaches for industry and consumers.
Perkovic hopes that in making decisions about potential changes to superannuation, the Government will take into account what the superannuation industry and its fund members have gone through in recent years. Perkovic is concerned about a potential loss of confidence in the superannuation system that could occur as a result of too many changes over too short a time period.
Changes to super also represent significant costs to the industry in terms of implementing new systems and reissuing Product Disclosure Statements, Perkovic said. These are costs that are ultimately borne by consumers, and which impact on their retirement outcomes.
The debate around costs in superannuation is raging at the moment and centres largely on the commissions paid to financial planners. Perkovic said while the current examination of the costs incurred in super is valid, the adequacy of superannuation and addressing this country’s savings problem is a bigger and longer term problem that needs to be addressed. Furthermore, the role financial planners play in educating consumers should be acknowledged.
Perkovic also touched on the possibility that the Government may at some stage remove the tax-free exit concessions on super. Perkovic believes that such a move would represent a penalisation of those who have taken the initiative to save for their own retirement, and questions why the Government would want to create disincentives for people to save.
Perkovic acknowledges that while changes to superannuation may be required in the future, she believes now is the time to restore confidence in the industry, not make changes.
Count Financial will also be submitting a letter to the Henry Tax Review supporting the maintenance of the imputation tax system. Speaking at the Count annual conference this week, former Prime Minister Paul Keating warned of the impact the removal of these tax concessions could have on super balances.
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