Government renews push for choice of super

The Government has put its choice of superannuation fund policy firmly back on the political agenda with an election night commitment to fund a consumer education campaign on the proposals.

The minister for revenue and assistant treasurer, Senator Helen Coonan, yesterday announced the Government would commit $28.7 million over four years from its budget for theAustralian Taxation Officeto conduct the education campaign.

The announcement came on top of last week’s decision by the Government to re-introduce the choice-of-fund legislation, the Superannuation Legislation Amendment (Choice of Superannuation Funds) Bill, for consideration in the winter sitting of parliament.

Coonan says the education campaign is expected to start at least six months prior to the commencement date of choice of fund.

But, as of this morning, neither the Labor Party or the Democrats had given any indication they would alter their stance to support the Government’s renewed push for choice-of-fund.

Before last year’s election, the Democrats rejected the Government’s choice proposals in the Senate after the Government refused to give same-sex couples equal rights under superannuation laws, while the Labor Party has consistently opposed choice-of-fund ever since it was first proposed in 1997.

As well as the announcement on choice-of-fund, the Government used last night’s budget to re-confirm its commitment to the raft of promises on superannuation it made during last year’s election campaign.

These include proposals to allow superannuation to be split between couples, a reduction in the maximum surcharge rate to 10.5 per cent over three years, and the introduction of a Government co-contribution into superannuation for low income workers.

TheFinancial Planning Association (FPA)today welcomed the Government’s announcements on choice-of-fund, saying it was imperative for consumers to be able to shop around and choose a fund that suits their specific needs.

But FPA chief executive Ken Breakspear says choice-of-fund should be just the first step in what should be a much wider program of reform on superannuation.

“We seriously need to simplify and demystify the superannuation process by increasing education about how superannuation works, and the benefits and value of compounding investments over time. Simplifying the tax treatment of super by removing the upfront contribution and surcharge tax components will also boost attractiveness,” Breakspear says.

The Investment and Financial Services Association (IFSA) also expressed support for Government’s superannuation initiatives, but called on the Government to live up to its election promise to examine the possible introduction of Growth Pensions.

“IFSA now keenly awaits developments on the Government’s election promise to review Growth Pensions. If appropriately engineered and targeted, growth pensions will provide retirees with superior income streams, but at no additional cost to the budget,” IFSA chief executive Lynne Ralph says.