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The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, has indicated the Government would like a superannuation system that delivers a better than adequate retirement income for Australians.
“As you would be aware, the interim report of the Henry Review found that a contribution rate of 9 per cent provides for an adequate retirement income for most people,” Bowen said.
Bowen said he believes “adequacy should be the minimum objective for retirement incomes”, and as such “we need a national discussion about whether to aim for something better than adequacy”.
“We need to talk about further growing the pool of savings at the disposal of the economy and giving average Australians a retirement that is perhaps better than ‘adequate’.”
Speaking at a SuperRatings conference in Melbourne yesterday, Bowen also pointed to the need for a more equitable distribution of superannuation tax concessions between low and middle-income earners and high-income earners.
“The fact that the top 5 per cent of contributors make around a quarter of all concessional contributions to superannuation while 1.2 million people do not receive an income tax benefit on their concessional contributions is a compelling one,” Bowen said.
Bowen is optimistically hoping the changes arising from the current reviews of superannuation will escape tinkering by future governments.
While he acknowledged that the “annual Budget night changes to the superannuation system have been the norm for at least the last decade”, Bowen said he hoped the current reviews would reduce or eliminate the need for annual changes to tax and other superannuation settings.
Bowen said the Henry and Cooper reviews should be seen as an opportunity to bring “greater certainty to superannuation policy”, rather than reviews that would stifle progress.
Bowen said the reviews were an opportunity to “rejuvenate the system” during what he called a “crucial period of reform”.
“I do think we need a period of policy stability for super. And these reviews, once completed and worked through, are the best way to get it,” Bowen said.
Bowen reiterated the Cooper Review’s focus on possible reduction in costs and fees and an improvement of long-term rates of return. He also pointed to a reduction in complexity, the simplification of rollovers and greater use of electronic transactions as focuses of the current reviews.
Meanwhile, the Financial Services Working Group is continuing to examine the disclosure of fees, charges and adviser remuneration relating to superannuation funds and other financial products.
