- AIST Policy News - 2 Feb 2017
AIST Policy News
AIST Budget submission puts focus on low income earners and fast-tracking 12%
AIST has called for more Government support to improve the retirement outcomes for low income earners and for the 12% timetable to be brought forward.
In our 2017-18 Budget submission (which was covered in the Australian Financial Review), we note that the current package of super reforms has created a lot of uncertainty and therefore should be implemented and allowed to settle. The changes we recommend are non-disruptive and would improve super, especially for low income earners.
Our key recommendations are as follows:
- An independent publicly-funded body should be set up to assess superannuation policy changes, to develop and refine tools to be used in this process, and to be available to Parliamentarians intending to propose superannuation changes.
- Key Performance Indicators (KPIs) should be developed to track whether superannuation is delivering against system objectives.
- The $450 per month income threshold for the superannuation guarantee be abolished from 1 July 2017.
- The Low Income Superannuation Tax Offset (LISTO) rate be doubled for Australians earning less than the tax-free threshold, and that the LISTO be adjusted to reflect the increase in the SG rate.
- Recommencement of increases to the Superannuation Guarantee (SG) rate from 1 July 2017, with a view to achieving 12% in July 2021.
- Age-based rules that prevent contributions should be removed, along with work tests for 65-74 year olds and under 18s. In addition, retirees should be allowed to ‘top-up’ their retirement income streams.
- The proposed increase in the Age Pension age to 70 years should be ruled out, and Budget forecasts should be recalculated based on the Age Pension age increasing to 67 years only.
- The SG should be linked to gross remuneration, and not Ordinary Time Earnings (OTE).
- SG should also be payable on paid parental leave, and a $2,000 return-to-work super bonus should be considered.
- The threshold for small lost member accounts should be progressively reduced back down to $2,000 by January 2019 and the lost and unclaimed super rules should be reviewed.
- CGT relief to facilitate fund mergers should be extended, and a penalty regime implemented for funds who fail to move accrued default amounts (ADAs) into MySuper products by the deadline of 30 June 2017.
- The Age Pension assets test taper rate should be reduced to $2.
- Funding to Indigenous identification schemes should be increased, and the provision of financial counselling services to Aboriginal and Torres Strait Islander people increased.
Consumers will benefit from retaining Super Complaints Tribunal
AIST has strongly opposed recent draft recommendations from the External Dispute Resolution Expert Panel to transition the Superannuation Complaints Tribunal to an industry ombudsman scheme.
In a submission to Treasury last week – responding to the External Dispute Resolution Interim Report released in December – AIST has said that transitioning the Superannuation Complaints Tribunal (SCT) would have a detrimental impact on consumers and superannuation funds and therefore it is imperative that the tribunal model be retained. The tribunal should, however, undergo legislative reform in areas such as funding, jurisdiction and operational flexibility.
AIST has supported a number of other recommendations from the report including introducing expert panels within dispute bodies, external reporting on fund Internal Dispute Resolution, and the development of a consumer Code of Practice.
Members seeking more information can contact AIST Research Officer Jake Sims at email@example.com
Senate Inquiry into objective of superannuation Bill
AIST will appear before the Senate inquiry into the objective of superannuation bill next week.
The Inquiry was announced in November 2016 after the Senate referred the provisions of the Superannuation (Objective) Bill 2016 to the Economics Legislation Committee for inquiry and report by 14 February, 2017.
The proposed primary objective of the superannuation system is to provide income in retirement to substitute or supplement the age pension.
In AIST’s submission to the inquiry – lodged in December last year – AIST voiced strong support for a legislated objective of superannuation in a form and structure that will genuinely guide the development of future superannuation and retirement incomes policy. AIST believes the proposed objective in its current form will not achieve this.
In particular, AIST will be raising concerns around the lack of reference to comfort. AIST will also use next week’s appearance to raise other concerns with the proposed objective such as lack of widespread support for definition itself, lack of binding force and absence of measurement tools.
AIST also believes the proposed objective doesn’t recognise the role superannuation plays in increasing national savings and doesn’t address the super gender gap.
Members wishing more information – or to provide input ahead of the hearing – should contact AIST Policy & Regulatory Analyst, Richard Webb at firstname.lastname@example.org
GNGB call for expressions of interest
The Gateway Network Governance Body Ltd (GNGB) is seeking expressions of interest for people to join the GNGB Resolutions Group Standing Panel.
The GNGB is the industry self-governance body for the Superannuation Transaction Network (STN) and provides governance and oversight to promote the efficiency and integrity of the network on behalf of industry stakeholders.
The GNGB is currently calling for expressions of interest to join the GNGB Resolutions Group Standing Panel which is an important element of the STN governance framework to support any adjudication required in the event of any STN related disputes in the future. Please refer to the expressions of interest document for further information.
Applications have been extended until 07 February, 2017.
AIST to appear in front of Senate Inquiry into insurance
AIST will appear before the Senate Inquiry into insurance at a public hearing in Melbourne to be held mid-February.
The Joint Committee on Corporations and Financial Services (the “PJC”) inquiry into the life insurance industry is looking at the need for further reform and improve oversight of the life insurance industry.
In a joint submission with ISA lodged in November, AIST noted the problems in Australia with underinsurance and highlighted the need to get the default settings right, remove conflicts of interest and work together with the rest of the superannuation industry to protect members’ interests.
AIST will appear before the Committee on 22 February. Members seeking more information can contact AIST Executive Manager, Policy & Research, David Haynes at email@example.com
Senate puts spotlight on unpaid super
The spotlight continues to shine on unpaid super with hearings having commenced in the Senate Inquiry and the Minister for Revenue and Financial Services Kelly O’Dwyer revealing a multi-agency working group to examine the issue.
The parliamentary inquiry - conducted by the Senate Economics References Committee following a motion put forward by Shadow Minister for Financial Services, Katy Gallagher – will examine a range of factors contributing to the unpaid super problem.
The Australian Tax Office (ATO) and Industry Super Australia appeared before the inquiry on 25 January, with further hearings expected post-submission close date.
On the same day, Kelly O’Dwyer announced a multi-agency working group that has been set up to investigate and develop recommendations to deal with SG non-compliance.
The working group – that’s been in operation since December 2016 – is chaired by the ATO and contains representatives from Treasury, Department of Employment, ASIC and APRA.
The group is due to provide an interim report to the Minister at the end of this month, with a final report due in March 2017.
Submissions are due by February 17, 2017. The Committee is due to report by March 22, 2017.
AIST is in the process of finalising its submission to the Inquiry. Member feedback can be provided to AIST Policy & Regulatory Analyst, Richard Webb at firstname.lastname@example.org before Friday 10 February.