Tax-preferred status of super being placed at risk
The tax-preferred status of superannuation would be placed at risk if it was allowed to become a virtual “piggy bank” from which people could draw funds for any purpose they liked, according to former Keating adviser and now chairman of AustralianSuper, Dr Don Russell.
In a keynote address to the Australian Institute of Superannuation Trustees’ (AIST) ASI Investment Week conference, Russell warned against shifting superannuation from the purpose which had given it its tax-preferred status – the self-provision of a comfortable retirement.
He expressed concern that there were those within the Government who were using the extraordinary circumstances of the COVID-19 pandemic as a cover to press for changes to superannuation which would ultimately damage the purpose of the system.
In doing so, he said it had been very difficult for Australian superannuation fund executives to counter the Government’s hardship early release superannuation regime.
Russell said nobody was going to be suggesting that they would not make a single penny available for those suffering financial hardship.
However, he said the reality was that superannuation was a long-term savings vehicle and this was something that had justified it being granted tax-preferred status.
Russell said that in the broader scheme of things superannuation had helped deliver a comparatively affordable pension system by international standards representing just 3% of gross domestic product.
And he said that as the Australian economic moved out of the COVID-19 pandemic it was obvious that the Government would be hard-pressed to deliver the necessary extra spending on aged care and child care, making it important that superannuation continued to deliver on its primary objective of self-provision.
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