ASFA: Don’t switch without advice
The Association of Superannuation Funds of Australia (ASFA) has joined the chorus of finance industry professionals urging members of superannuation funds not to redeem their superannuation without first seeking professional advice.
“We are hearing of a rise in the number of fund members enquiring about moving their savings out of superannuation and into bank accounts,” ASFA CEO Pauline Vamos said. “This is primarily motivated by nothing more than panic about global financial markets.”
Vamos said superannuation is still the most suitable vehicle for retirement savings in Australia and noted that there are financial consequences of taking money out of a superannuation fund, from which consumers may not recover.
“First, they crystallise their losses because they are selling out of shares and other investment vehicles that will undoubtedly rebound. The second is that they immediately lose all taxation benefits of holding their money in the superannuation system.”
Vamos said also that those aged over 65 who are not working would not be able to re-enter the system if they leave.
Vamos said fund members are losing perspective because of the current financial downturn, but strongly urged members to consider the tax implications of taking out their super.
“We recognise that people have short, medium and long-term financial needs. We know people are hurting from the losses, but they need to position themselves now to take advantage of the potential spikes and the long-term growth.”
Vamos said the superannuation industry is highly regulated and noted the industry’s strong performance over the past 20 years.
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