The Small Independent Superannuation Funds Association (SISFA) believes the federal government’s proposed five-year freeze on superannuation changes is irresponsible.
SISFA chair Michael Lorimer said anything from a superannuation policy-setting perspective that was designed to create an environment of certainty and confidence was welcome, however, it was unnecessary to enshrine such terms in legislation.
“A total freeze for five-year periods would be an irresponsible measure from a policy-setting framework because it rules out any changes, positive or negative,” Lorimer told selfmanagedsuper.
“A five-year period is an arbitrary number – it could be three, seven or 10 years.
“It needs to be a dynamic process.”
Treasurer Chris Bowen last week announced a five-year halt on any major changes to the country’s superannuation tax policy if Labor was re-elected at the upcoming election.
The move, which would commence immediately and be enshrined in legislation, would promote stability in the super system, Bowen said.
“This will give Australians the confidence to make investment decisions in the knowledge that the rules will not be subject to constant change,” he said.
“Australians are living longer, they need to feel that the superannuation system is fair and sustainable, and that superannuation policy is removed from the political cycles for genuine confidence in the system to build.”
In addition, the government would also bring forward legislation to establish its proposed Super Council, which would ensure any future changes to superannuation were consistent with an agreed Charter of Superannuation Adequacy and Sustainability.
“The charter will include the commitment to a five-year moratorium on changes to the superannuation tax policy,” Bowen said.
“The establishment of an independent council will further enhance and protect Australia’s superannuation system.”
Lorimer said the review of the superannuation system and its operation should be an ongoing process.
“For example, we’ve been pushing for the concessional contributions caps to be revisited for a long time, so if this in its current form means it will be ruled out for another five years, we certainly couldn’t support that,” he said.
“We’ve also said previously on public record that we’re not a huge fan of the Super Charter as that’s just layer upon layer of additional bureaucracy, which is totally unnecessary, superfluous and can’t be guaranteed to achieve anything than what’s possible within the existing framework.”
The new policy was again a reflection of the government’s failure to understand the super system, he said.
“I don’t think this is what the public is calling out for,” he said.
“What consumers need in superannuation, broadly speaking, is confidence that the fundamental long-term policy aspects of superannuation taxation are robust.”
Prior to the conclusion of the five-year moratorium, the Super Council would conduct a transparent review of the issues that needed to be addressed.
Once any proposed changes from that process were made, there would be a moratorium on further policy changes for another five-year period.
The SMSF Professionals’ Association of Australia (SPAA) welcomed Bowen’s announcement to commit to the five-year freeze on superannuation changes.
“SPAA has been advocating that continual change to the superannuation rules acts as a disincentive for people to save for retirement,” SPAA chief executive Andrea Slattery said.
Slattery also said the association supported the decision to establish the Super Council as a way to ensure superannuation is depoliticised.
“There are many examples of similar boards that advise government that play an important role in giving advice that is objective, independent and above day-to-day politics,” she said.
“To ensure this happens, it is critical that eminent people from across the community who truly understand the retirement needs of Australians be appointed to the proposed Super Council.”
