One of Australia’s largest industry superannuation funds, Equipsuper, has argued that the Government should amend the sole purpose test applying to superannuation fund trustees to allow members to use their superannuation to pay for financial planning.
In a submission to the Parliamentary Inquiry into the structure and operation of the superannuation industry, Equipsuper has argued that the role and regulation of financial advice in relation to superannuation advice is critical to the effectiveness and safety of the industry given the compulsory nature of superannuation.
“Arguably, how one’s superannuation assets are invested is the second most important investment decision after the purchase of the family home,” it said. “Therefore, it is very important that members are able to access sound, unbiased and cost-effective financial advice.”
The Equipsuper submission said that, currently, the Australian Prudential Regulation Authority would only permit the cost of financial advice in relation to a member’s specific superannuation interest to be deducted from his or her account balance, and that this was based on the premise that financial advice in relation to non-superannuation investments would not be within the parameters of the sole purpose test.
It said that as upfront fees were not always within the reach of all members, Equipsuper was proposing that the cost of broader retirement planning advice be permitted to be deducted from a member’s superannuation account balance.
“A financial adviser preparing a full financial plan must consider all the assets and liabilities of his or her client,” the submission said. “We submit that the whole cost of such a plan [pre-agreed with the member] should be able to be deducted from a superannuation account, provided it is being prepared to support the retirement income needs of the member.”
