Several industry associations have come together to form the Alliance for a Fairer Retirement System as a direct response to Labor’s proposal to disallow refunds of excess franking credits for a range of retirees and shareholders.
The alliance is comprised of the SMSF Association, Self-managed Independent Superannuation Funds Association (SISFA), Australian Shareholders’ Association, Australian Listed Investment Companies Association, National Seniors Australia and Stockbrokers & Financial Advisers Association, with more groups expected to join in the near future.
The alliance will explore options to fix problems with existing super taxation, age pension means testing and broader retirement income systems.
The associations represent millions of senior Australians, shareholders, self-funded retirees and those planning a sustainable retirement, including over 1 million SMSFs.
Alliance for a Fairer Retirement System spokesperson and SMSF Association chair Deborah Ralston said the alliance will contribute substantially to the debate on improving retirement outcomes for millions of Australians.
“We need more evidence-based research and policy development, and increased bipartisan support to complete the development of Australia’s retirement income system,” Ralston said.
“Once that development has been completed, there needs to be a period of ongoing stability for the system so that Australians can plan for their retirement with confidence.”
SMSF Association chief executive John Maroney welcomed the creation of the alliance and stressed the need for clear communication on key issues.
“Let’s talk about ‘company paid tax credits’ rather than ‘franking credits’ because that’s what the issue is,” Maroney noted.
“Companies have already paid tax on behalf of its shareholders, hence it is appropriate for those tax credits to be available for all shareholders.”
SISFA managing director Michael Lorimer added the consequences of Labor’s proposed policy will hurt real people who are not wealthy.
“Just because you have an SMSF or small Australian Prudential Regulation Authority fund does not mean you are ‘wealthy’,” Lorimer said.
“Labor’s proposed policy will change investment behaviour, which may drive more people onto reliance on the age pension.
“The announced carveouts are arbitrary and mean there may be more complexity and unfair consequences will ensue.”
The alliance is considering a report, prepared by Rice Warner chief executive Michael Rice, on the implications of Labor’s proposed policy on excess franking credits.
It said the report exposes many of the poor design features of the policy and the unlikelihood the projected revenues will eventuate if the policy is ever implemented.
The alliance will commission and encourage further research and policy discussion on these topics and intends to convene a summit later this year on retirement system design.
It has called for all political parties to carefully consider issues related to super taxation and retirement design, and to ensure policy development is undertaken on a holistic basis and not via ad hoc steps in response to short-term revenue objectives or political objectives that could undermine confidence in the retirement system.