The Labor Party has launched its superannuation policy revealing a number of new steps but has not departed from its core positions of investment choice for all members and equal rights for same sex couples.
The first chapter of Labor’s Retirement Incomes Policy was announced at theAssociation of Superannuation Funds of Australia(ASFA) conference in Brisbane by Shadow Treasurer Mark Latham. The policy has been developed by Latham and Shadow Minister for Retirement Incomes Senator Nick Sherry.
In the much anticipated policy on super, Labor has called for comprehensive reform to superannuation including the automatic consolidation of accounts, investment choice to all members and equal rights for same sex couples.
However the policy has added the proviso that all funds will be required to provide a minimum investment choice of five options, beginning with an income only option and extending to an aggressive growth option.
This will be teamed with the removal of entry and exit fees when funds are consolidated with funds only permitted to charge fees necessary to meet the administration costs of the rollover.
The policy proposes an automatic but not compulsory ‘consolidation regime’, where unless notified otherwise theAustralian Tax Office(ATO) will use tax file numbers to consolidate savings into members’ most recent active account.
Labor says consolidation will result in savings for members through reduced administrative costs of at least $200 million per year, while reducing the cost of operation of funds.
The policy says: “Fundamental to a safe choice regime is the clear disclosure of all fees, charges and commissions that may apply to a fund.”
As such, when transferring from one fund to another, members will be required to sign a standard member option form comparing fees, charges and long-term investment returns for both the fund that the member is leaving and the new fund.
To facilitate this a standard reporting format for earnings, fees, charges and taxes levied on funds has also been called for. No more than three pages long, it will be part of a fund’s basic service obligation.
Under the new policy Labor will also call for the legislative amendments necessary to ensure same sex couples have the same rights in relation to superannuation entitlements as de facto couples.
The policy aims for retirement income levels that are well above the basic age pension and sustainable in the long term, while also focusing specifically on improving the level of retirement income of lower to middle income earners.
ASFA has welcomed the ‘visions’ for superannuation presented not only by the Opposition but also the Government, with Senator Helen Coonan presenting the Government’s perspective of the future, including the need for simpler and more flexible rules to allow people to move from full-time work to phased retirement.
ASFA chief executive Philippa Smith says the association will carefully consider Labor’s proposals for automatic consolidation of super accounts and access to annuities, as well as the Government proposals.
“The devil will be in the detail, as always,” Smith says.
