The current global financial crisis isn’t all bad news, providing a unique opportunity to re-examine and tackle some of the more vexing issues in taxation and self-managed superannuation.
This is the view of taxation academic Professor Gordon Cooper, who, at the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) national conference in Adelaide this morning, presented delegates with a sample of 18 submissions – covering contributions, death benefits, investments and pensions – that he has made to the Government.
One of Cooper’s more controversial proposals is for the Government to re-examine the unlimited tax-exempt pension status of superannuation.
“It is not appropriate to have an unlimited tax-exempt pension,” Cooper said. “I suggest pensions should be capped to [average weekly ordinary-time earnings].”
Cooper said it was time to revisit this “generous tax concession”.
“If we did this, people would be encouraged to leave their money in superannuation. At the moment, young and healthy people can take out all of their money and spend it, then fall back on the age pension. I don’t think this is at all appropriate and it’s time the Government looked at this.”
Cooper also wanted to see changes made to the way investment strategies were documented.
“My experience with investment strategies is that they’re not worth the paper they’re written on,” Cooper said.
“[The Australian Prudential Regulation Authority] says investment strategies must be documented. But the bigger issue for me is just how relevant are those investment strategies.”
He said there was an increasing tendency by trustees to put together investment strategies that were too generic, with particular asset classes ranging from 0-100 per cent.
“You rarely ever see a justification or reasoning for why the trustees have picked a particular asset class for their strategy. This is something that should change,” he said.
“I don’t think just saying you want to outperform the market is a good enough reason or objective. Trustees need to be more specific.”
