The Australian Labor Party (ALP) will move in the Senate today to disallow the Federal Government’s superannuation portability regulations in the wake of the unanimous rejection by all parties represented in the Senate Select Committee on Superannuation.
However the Assistant Treasurer, Senator Helen Coonan can defeat the ALP move if she is prepared to agree to amend the regulations in line with recommendations contained in the Senate Committee report.
Key elements of the Senate Committee’s report are strict limitations on portability out of active superannuation accounts and a recommendation that portability from active accounts be handled via legislation for choice of fund.
The Australian Democrat spokesman on Retirement Incomes, Senator John Cherry has signalled that his party will only support disallowance of the regulations if Senator Coonan refuses to make the amendments.
However the unanimous Senate Select Committee report represents a substantial embarrassment for Senator Coonan as it means Senators from her own party have opposed the regulatory approach she gazetted on July 31.
The Committee has three Liberal Senators including the Chairman, Senator John Watson.
To ensure her regulations are not disallowed, Coonan will have to agree today to gazette amendments substantially limiting the degree to which portability can be applied to active superannuation funds.
The committee said that while it supported the principle of portability and the ability of individuals to consolidate their superannuation accounts, this was in relation to inactive accounts.
This is at odds with Coonan’s proposed legislation which would allow the portability of active accounts — something which gave rise to concerns within the committee that her regulations would generate even greater growth in superannuation accounts.
The committee report also argues for the regulations to be accompanied by a targeted superannuation campaign, actively encouraging a reduction in the number of superannuation accounts in Australia.
On the question of portability out of an active superannuation account, the Committee said it believed that this was an issue best dealt with through choice of funds legislation on the grounds of efficiency and consumer protection.
Opposition spokesman on Retirement Incomes, Senator Nick Sherry says the Committee’s report represents a “damning condemnation” of the minister.
The Australian Democrats spokesman, Senator John Cherry says the committee’s report revealed major shortcomings in Coonan’s regulations and signalled that the Australian Democrats would be supporting disallowance if amendments were not agreed to.
