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Rice Warner pushes for joint super accounts
Rice Warner has called on the government to allow joint superannuation accounts for married couples, claiming it will benefit SMSFs as well as APRA-regulated funds.
In its pre-Budget submission to Treasury, Rice Warner said the change would increase the efficiency of the superannuation system in line with concerns raised by the Financial System Inquiry.
As well as making it easier to engage members, by allowing joint accounts the government could reduce the number of superannuation accounts "by several million", said the submission.
"If half of all couples exercised the option, there would be a reduction of 3.5 million accounts or 12 per cent of all accounts," Rice Warner continued.
Married members who combined their accounts would also be more likely to consolidate all of their superannuation, said the submission.
Furthermore, Rice Warner said an SMSF would have a simpler process too.
“Where both partners of a couple are the only members, the accounts would be much [more] simplified as they wouldn’t need separate annual statements,” Rice Warner stated.
In addition, retirement benefit projections provided by superannuation funds would be more accurate within a joint account, it said.
"For example, the use of the age pension in benefit projections or online calculators would be based on the correct current marital status," Rice Warner explained.
The often-discussed 'female retirement savings shortfall' would also benefit, since couples would be able to plan their retirement finances together, said the submission.
Superannuation funds themselves could market to members to bring their spouses into the fund.
"This would increase the number of active members, which is the goal of all funds.
"We could [also] remove the facility allowing members to split their contributions and allocate some to a spouse. This is an administrative burden and adds little value to the system," said the submission.
Joint accounts for married couples would also simplify the process for SMSFs, Rice Warner said.
"Where both partners of a couple are the only members, the accounts would be much simplified as they wouldn’t need separate annual statements.
"If this initiative were introduced, it would improve efficiency in the system, be beneficial for millions of members and have no cost to government," Rice Warner said.
It is a good idea.
Actually, joint and survivor annuities are possible under ordinary trust law. I have sometimes wondered whether the SIS Act does allow joint accounts being based on trust principles. The drafting of the regulations however seems to have been done by people who think superannuation accounts are like bank accounts instead of defeasible interests in a semi-discretionary trust.0- This will work if we keep it simple. As it is an option to choose. I would have thought that opting into a joint account gives each a 50% equity similar to joint tenancy. It could also allow double contributions regardless of which employer actually pays. There are a huge amount of positives especially for estate planning. Lets not focus on the 40% of people divorced but allow the 60% who are still together to benefit.0
- Not all bad. The super accounts on divorce are factored into the joint assets, so I cannot see that making much of a difference, the complexities on death by one are less, in that a benefit would no longer have to be paid out unless the member has a Binding Death Nomination, the differences between male and female balances would not be as pronounced and, if it is voluntary, why not look at it for those people who may benefit?0
- When more than 40% of marriages end in divorce in this country and even higher rates for second marriage failures I think this is a dangerous idea. Often the issue is one partner is domineering or controlling and to give them the ability to manipulate their partner's super.
This is one of the downsides I see with SMSF's as well and keep a very close eye on clients to avoid this issue.
what if there is an age difference how to you track pension entitlements if you are consolidating the super unless you are going to keep separate accounts in which case you still need to prepare 2 statements which defeats the purpose they have stated..0 - Love to see the legal fallout and the additional expense to the members/trustee when an acrimonious divorce or separation occurred. More expense and fees to lawyers, not well thought out.0
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