The Coalition government has earned only a tentative endorsement from theFinancial Planning Association(FPA) following the release of its much anticipated superannuation policy.
The Government launched its policy on superannuation in full today, with the package’s headline proposals including a reduction in the superannuation surcharge, greater allowances for splitting superannuation contributions amongst couples and a government superannuation co-contribution for low income workers.
The proposals will see a phased cutback in the rate of the surcharge from 15 to 10.5 per cent over three years, while couples will be allowed to place up to 50 per cent of their superannuation contributions in the account of their spouse. The government co-contribution would see the government match the voluntary super contributions of low-income workers up to a maximum of $1000.
Other Coalition superannuation policy initiatives announced today include allowing parents to contribute up to $1000 in a superannuation account for their children, a boost to superannuation tax deductions for the self employed and an increase in the frequency of compulsory superannuation payments by employers from annually to quarterly.
FPA chief executive Ken Breakspear welcomed the initial details of the government’s policy today, but says the proposals should not exclude the government from committing to an extensive review of superannuation policy.
He says the FPA would continue to push for wide-scale review of superannuation that would include an examination of proposals to abandon the surcharge all together, as well as a range of proposals to boost savings incentives for couples and those on low incomes.
“These are positive announcements and they do go some way to encouraging superannuation contributions,” Breakspear says.
“But in our view they do not do away with the fundamental need for a review of superannuation, post-election.”
The Government’s superannuation announcement coincides with the FPA’s release of its 2001 election survey, revealing extensive support by financial advisers for a substantial review of retirement income policy.
Breakspear says the survey, conducted in the first two weeks of the federal election campaign, ranked a review of Australia’s retirement income system – including superannuation, aged pension, health care and the integration of superannuation with the government social security system – as one of the top issues for financial advisers in the election.
“Members have indicated that a national debate on Australia’s savings strategy is of great importance when it is uncertain whether ordinary wage earners can realistically save enough for retirement without relying on the national social security system,” he says.
Respondents to the survey were also supportive of calls for the government to restrict the term ‘financial planner’ and ‘financial adviser’ only to individuals operating under the Financial Services Reform Act regime, and for real estate agents who offer financial advice to be brought under the guise of the regime.
Breakspear says the survey results will play a key role in the formation of strategic policy initiatives by the FPA, which will be presented by the association to a newly formed government.
“We will be taking the survey into account, and whatever party forms government, we will be putting our views to them early in the piece,” he says.
