TheFinancial Planning Association(FPA) has recommended the early release of superannuation savings as a measure to encourage Australians to save for their retirement.
Speaking today at a Senate Select Committee on Superannuation inquiry into the adequacy of superannuation, FPA chief executive Ken Breakspear said people who make voluntary contributions to superannuation should have access to this money before retirement for specific purposes such as a deposit for a home, education and health.
Breakspear said Australian Bureau of Statistics (ABS) data shows many Australians are using their super accumulations to pay for debt they accumulated before they retired, rather than to fund their retirement.
“The Super Guarantee charge is only one facet in evaluating the level of adequacy in retirement. A major driver is each person’s lifestyle choices and how the funding of these impacts on voluntary savings,” he said.
Breakespear said the FPA would support the introduction of a Medium Term Savings Vehicle (MTSV), which would allow Australian’s access to their super money.
FPA national policy and government relations manager Con Hristodoulidis says while the FPA is still testing such a model and working out its “bells and whistles”, data from theAustralian Prudential Regulation Authority(APRA) suggests a substantial amount of Australians do make voluntary contributions or salary sacrifice.
“According to APRA, $5.2 billion is voluntarily contributed by employees to super, and that does not include salary sacrificing. ABS data indicates that just under 2 million people make voluntary contributions,” he says.
Yesterday, the FPA faced questions at the inquiry from the shadow minister for retirement incomes and savings Nick Sherry on why financial planners do not recommend industry funds.
According to Hristodoulidis, the FPA will now conduct some member research on how many planners do recommend industry funds.
