The Financial Services Council (FSC) has called on the federal government to help superannuation fund members rebuild their retirement savings where they were forced to take early access due to COVID-19 via a new co-contribution scheme and one-off concessional cap.
The council made the call as part of a new report, “Accelerating Australia’s Economic Recovery”, which outlines a number of areas in which the financial services sector can contribute to the recovery of the economy from the COVID-19 downturn.
The report covers the areas of funds management, financial products and advice, life insurance, tax reform and superannuation, and under the latter, the FSC made specific recommendations to rebuild super fund balances.
“The COVID-19 pandemic has impacted savings across the sector, with the industry-wide rate of return for the March quarter being -10.3 per cent and for the year being -3.3 per cent,” it noted.
“Market volatility has disproportionately impacted Australians close to retirement and those who have accessed their savings early to alleviate hardship.”
To deal with these events, the FSC called on the government to establish a co-contribution scheme for fund members who used the early release scheme and would need to replace that money. Under the scheme, the government would contribute $1 for every $5 a member contributes up to a maximum of $10,000.
Additionally, the FSC also suggested people aged over 50 be offered a one-off higher superannuation cap of $50,000 that could be carried forward if unused.
FSC chief executive Sally Loane said the financial services sector must be part of the economic recovery process and the report offered new policy ideas and solutions to existing problems within the sector.
Among the new policies, the council put forward the development of Australian superannuation and infrastructure investment vehicles (ASIIV), which would be geared towards seeking investments from retail super fund members and SMSFs.
It said ASIIVs would “democratise investment in critical domestic infrastructure development” and offer investments in new and existing infrastructure assets to any person with money in a superannuation fund. They would be tradable on secondary markets, available to retail investors through existing platforms, and unitised and regularly valued by independent consultants.
“The ASIIVs will unlock a large chunk of funds – around $1.7 trillion in choice and self-managed superannuation funds – for infrastructure projects from investors who today have limited access to them,” Loane said.
“The FSC and its members want to help drive Australia’s long-term economic recovery. By implementing the reforms raised in this report, the national cabinet and commonwealth government can get the best bang for the nation’s buck and get Australia back up on its feet.”
In March, the FSC was one of a number of industry groups which supported the government’s COVID-19 relief measures.
