The Association of Superannuation Funds of Australia (ASFA) has called for stability to be established with the current retirement savings framework and as such has argued against the introduction of a policy stopping the ability of some retirees to receive imputation credit refunds.
“In ASFA’s view, tinkering with the broader retirement policy settings ultimately risks undermining confidence in the superannuation system,” ASFA chief executive Martin Fahy told a recent House of Representatives Standing Committee on Economics public hearing into the implications of the proposed policy of removing franking credit refunds.
“The superannuation system has a $1.6 million cap in the retirement phase and we consider that a period of stability is needed to ensure that recent reforms to superannuation and the retirement funding system are bedded down and given a chance to work.”
Fahy told the hearing, held in Dee Why on Sydney’s northern beaches, that ASFA’s key concern was the impact the policy proposal would have on lower-income retirees with exposures to Australian equities.
Further, he revealed ASFA had done its own analysis on the change to the treatment of imputation credits, which found at face value at an aggregate level the policy would not have a significant impact on larger public offer funds.
However, he stressed that did not mean the proposal would have no effect on the Australian Prudential Regulation Authority-regulated sector at all.
“The exception is likely to be funds that cater exclusively to members with accounts in the tax-free retirement phase, some eligible rollover funds and that’s what could be impacted by transfers to the ATO, certain closed defined benefit schemes and some smaller funds,” he said.
Committee member Labor MP Matt Thistlethwaite said if Labor changed the imputation credit refund policy, a five-year moratorium on superannuation reforms would be brought in as well and asked if ASFA would support a move like this as one to restore confidence in the system.
“The question of how confidence is eroded every year to changes in the settings is obviously what we know from the research that’s out there and the level of disengagement is impacted by the level of tinkering,” Fahy said.
Therefore, to have the ability to pause and allow more considered and less frequent change to the system is something ASFA would back, he said.