The government needs to make a clear decision on superannuation, sooner rather than later, with the mounting speculation around potential changes damaging confidence, warns Towers Watson.
Towers Watson managing director Andrew Boal told SMSF Adviser there has been considerable discussion around the taxation treatment of superannuation and while these discussions continue, the average Australian superannuant is losing confidence in the system.
“Future change is inevitable, so I think the sooner we reach an agreement around what is an equitable and sustainable tax system for superannuation, the better,” said Mr Boal.
“I don’t think we’ll achieve that next year, but the discussion should at least go a lot further in 2016 in terms of identifying what we’re trying to do.”
Despite a bipartisan agreement on establishing the objectives of the superannuation system, there is still disagreement on what exactly the purpose of super is.
“The reason why it’s important to have an objective for the superannuation system is that when you start looking at all the other settings – such as tax, its sustainability and equity – those settings need to be influenced by what you’re trying to achieve and what the objective is,” he explained.
“From my perspective, the objective should be for most Australians to use their superannuation to draw down an income stream to produce good income in retirement. Now, defining what is 'good income' is something that needs to be discussed.”
The objective of superannuation should at least be clearly articulated as “not being the accumulation of wealth or a lump sum, but ... the accumulation of an asset which is used to draw an income in the retirement period”, Mr Boal said.
He added that he did not believe the superannuation system was ever intended to replace the age pension.
“I think it was always intended to supplement the age pension,” he said.
“As evidence of that, the numbers we’ve run on this show that, at the moment, about 80 per cent of retirees at least access a part age pension and even as the superannuation system matures over the next 30 years, that percentage will only fall to around 75 per cent.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
9 Dec 2016SMSFA chief exec steps down from uni board roleBy Stephanie Deller
9 Dec 2016ASIC set to eye pension wind-ups for illegal adviceBy Miranda Brownlee
8 Dec 2016Spike reported in scrapped SMSF auditorsBy Katarina Taurian
8 Dec 2016ATO set to scrutinise CGT relief claimsBy Miranda Brownlee
8 Dec 2016ASIC hits out at SMSF sector over resource drainBy Stephanie Deller
9 Dec 2016ASIC bans adviser following super failingsBy Katarina Taurian
- view all
ASIC set to eye pension wind-ups for illegal advice
Accountants operating in the SMSF space have been warned that ASIC will closely scrutinise pension wind-ups over the remainder of the financ...read more
- view all