ISA backs ALP’s dividend imputation move

14 March 2018

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.

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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.

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What a surprise....union backed super funds supporting a union party leader. This is an awful policy that will impact everyone in pension phase and just another reason not to trust superannuation as a savings vehicle. Stop changing the rules!

Its pretty easy to support a proposed change that you developed hand in hand with your business partner.

The ISA's David Whiteley backing the Labor Party !!!!!....BREAKING NEWS.!
They BUY the Labor Party's support through the donations of millions and millions of dollars of members funds siphoned off every year to support various unions and their "associated entities".
Whatever Bill Shorten says, the ISA will support wholeheartedly......that is the way when you are comrades.

Of course the ISA backs the ALP proposal - they probably suggested it to the ALP - because industry funds have been the biggest loser from the growth and popularity of SMSF's, which as the ATO stats show have a high proportion of investments in Aust Equities and an ever growing portion of it's members being in/moving to pension phase.

Who would have thought?? A remarkably well timed supporting statement from the Treasury wing of the Union movement backing the colluded policy position of the political wing of the Union movement. And not a conflict of interest anywhere to be seen.

It was probably the industry funds that dreamed up this horrible plan in the first place. It gives them an unfair advantage compared to their new enemy, the Self-Managed Super Funds. The unions won't be happy until they control the entire superannuation savings of every person in this country.

Why are people not specifically focusing on the retirement section of industry and retail super funds?In the retirement section no tax is payable on investment returns and all franking credits are returned within the Australian shares sector part of an individual's investment. Depending on how much a retirement section member has invested in Australian shares their investment return can be significantly affected by Mr Shorten's suggested policy. This is the sort of analysis I would expect superannuation associations to address rather than just scratching the surface of what has already been published.

how are his comments acting in the best interests of his members? Even they would have some clients who benefit.

I have struggled to understand how ISA member funds have been exercising their fiduciary responsibilities to their members for years on a variety of issues. This is just another example.

For them it is simple:

a. Act as a fiduciary in our members best interests
b. Feather our own nest/hire our union mates as trustees and keep out independent directors/advertise at the footy so I can get corporate box seats/rip of members on the cost of life insurance/mislead with 85%+ growth asset in 'balanced funds' and claim superior investment returns (during a bull market)/>50% illiquid assets in the GFC and not revalue (some members therefore funding other members retirement benefits)/WAGE WAR ON OUR MORTAL ENEMY - SMSF's by removing franking credits even though it hurts our own members and we therefore breach our fiduciary duty......again!

Option b is the obvious answer for the ISA. Nothing has changed and no-one should be surprised.

And ASIC and ACCC don't care as the 'level playing field' obviously has two tiers.

Vertical integration right there Richard Hedware: Labor - Unions - ISA (an unholy trinity if ever there was one).

And then investors will look to overseas markets for better returns, and that flow of money outside of Australia will impact negatively on business & share markets here.

If this proceeds then the basic advantage of super over normal investments will be radically altered. A person could earn $60,000 outside of super and still have the same after tax return and none of the complicated super rules...... Plus no death tax.

Of course ISA support ALP (they are an offshoot). What's the bet their member funds don't have a lot of retiree members (and that they don't stream the tax benefits to where they are generated).

Well I keep asking but no one seems to be able to clarify if franking credits are definitely paid back via the unit price for ISA pension/super funds. Perhaps that's why they don't care about this, they use the franking elsewhere?

Yes, ISA will be able to offset the tax from contributing members with their franking credits and the distribute the benefits across all members... Hence they dont see an issue with this marxist policy, it drives down competition provided by SMSFs/wraps by providing them with an unfair advantage.

so are you saying they use the franking from say equities invested in the pension phase, which should be refunded back to pension clients via the unit price, to offset accumulation contributions tax, i.e. bolstering returns on the accumulation funds ?

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