Industry Super Australia (ISA) has given substantial support to the Federal Oppositions proposals to remove dividend imputation refunds, but has found itself significantly at odds with other superannuation industry organisations.
While ISA chief executive, David Whitley claimed Labor’s proposed changes would have little or no impact on most superannuation fund members, the Association of Superannuation Funds of Australia (ASFA) said the changes would have a significant impact on low-income retirees both inside and outside of superannuation.
At the same time, the Financial Services Council (FC) warned that changes would act as a tax increase for many retirees and have many unintended adverse consequences, while the SMSF Association said the ALP’s move would undermine confidence in the superannuation system.
ASFA chief executive, Martin Fahey said that, as well, constant tinkering with the settings would continue to undermine confidence in the superannuation system.
“The system already has a $1.6 million cap in the retirement phase and our analysis show recent reforms to superannuation and the retirement funding system are working with time needed for these changes to be bedded down,” Fahy said. “If there is a concern about individuals with large retirement savings receiving the benefit of refundable imputation credits then this would be better addressed by measures more closely linked to retirement balance.”
“At face value, it appears that this proposal would impact Mum and Dad investors both through their superannuation and through the shares they own outside of super and compromise the long-standing investment neutrality principle,” he said. “There are a range of critical questions which need to be addressed, including whether the proposal would drive a bias to certain asset classes or distort the system in other ways.”
ISA’s Whiteley described the ALP policy proposal as “sensible” and suggested that it could significantly improve the fairness of the superannuation system if some of the savings were then reinvested to ensure the system responded to the changing nature of work which was stunting the retirement savings of women and millions of other low and middle-income earners.
