Changes to Australia’s superannuation system may be instituted if changes recommended by the Australian Institute of Superannuation Trustees (AIST) gain government approval.
The changes are being proposed to ensure all Australians benefit from the strong returns being achieved by super funds, and to enhance the equity of the system.
The peak body for Australia’s $ 1.6 trillion profit-to-member super industry has called on the Federal Government to use the 2022-23 Budget on March 29 to improve the fairness, equity, adequacy, and transparency of the retirement savings system.
Among the changes outlined in its Pre-Budget Submission, AIST recommended that the government:
• extend the Your Super, Your Future performance test to all Australian Prudential Regulation Authority (APRA) -regulated superannuation products and include their details in the Australian Taxation Office YourSuper tool;
• assess the level of financial coercion experienced by fund members, mainly women, through the early release of superannuation scheme; spirit
• extend superannuation to paid parental leave.
“Bumper super returns in 2021 are good news for those who benefit but the figures disguise the fact that many Australians are being left behind in their retirement,” AIST chief executive officer Eva Scheerlinck said.
“This includes women, low- and middle-income earners, and vulnerable people including those experiencing family violence.
“Although our retirement savings system is among the best in the world, the government has a great opportunity with the next budget to ensure it works to the benefit of all Australians, regardless of their gender, culture, education or socio-economic background.”
Ms Scheerlinck said extending the performance test would allow all Australians to see how their fund was performing, compare it to others and make informed decisions about where they want their super to be managed.
“The scope of the YourSuper comparison tool is only about ‘some of your super’: the AIST proposal is for an AllYourSuper comparison tool that would provide a demonstrable benefit for almost all Australians,” she said.
Ms Scheerlinck said AIST member funds were reporting an increase in cases of financial abuse, with fund members, usually women, informing them their superannuation was accessed through coercion or fraud by a domestic partner.
AIST estimated more than 70,000 of the 1.5 million women who withdrew superannuation through the early release scheme would have done so as the result of coercion.
“AIST requests that the government undertake a comprehensive assessment of the number of women who were coerced into accessing their superannuation during the early release of superannuation scheme and the detrimental financial impact this will have on their retirement,” Ms Scheerlinck said.
“This information is critical to informing future policy decisions and avoiding unintentionally facilitating abusive behavior and also aligns with the government’s commitment to end family violence.”
AIST also called for super on paid parental leave.
“Paid parental leave is the only paid leave that does not attract superannuation. This particularly disadvantages women who are the overwhelming majority of those on parental leave, and the current policy further exacerbates the gender super gap, ”Ms Scheerlinck said.
Other recommendations in the submission to the Housing Minister and Assistant Treasurer included:
• committing to increasing the Superannuation Guarantee (SG) to 12 per cent by July 1, 2025;
• amending superannuation and tax law to ensure children adopted under traditional Aboriginal and Torres Strait Islander law are treated like other children;
• legislating the objective of the retirement income system to ensure superannuation is used for nothing other than retirement savings (except in exceptional circumstances);
• progressing the promised abolition of the $ 450 per month income threshold for the SG to improve fairness and reduce incentives for casualization of the workforce, and including a commitment to universality of SG requirements for all PAYG employees, independent contractors, and the self-employed;
• improving the equity of tax concessions and support to achieve financial security in retirement for all Australians;
• measuring and publishing the impact of future changes to super on women; spirit
• strengthening action against SG non-compliance to address unpaid and underpaid super.
“As the country continues to manage the economic impacts of the pandemic, retirement income policy needs to continue to strive for these improvements so we can strengthen our retirement income system to ensure the long-term financial stability and comfort of Australians,” AIST said in its submission.