Rethinking super

THE Federal Government has responded to concerns about the safety of superannuation in a policy statement, Options for Improving Safety in Superannuation.

The statement recommends, among other things, a minimum capital adequacy scheme for super funds, requiring them to have capital equal to 0.5 per cent of the value of the fund.

However, Intech sales and marketing head Bruce Loveday questions the adequacy of the capital adequacy scheme in the event of the fund collapsing, saying it could be counter-productive by adding to costs while still providing insufficient protection.

The Government’s Superannuation Working Group, which has been appointed to review the policy statement, also has recommended an insurance-type arrangement be introduced for those funds not covered by the minimum capitalisation requirements.

Australian Institute of Company Directors CEO John Hall believes the long-term saving dilemma is one of the most urgent issues facing Australians today and is calling for major reform.

“We are the only country taxing superannuation three times and Australians are discouraged from placing more savings into superannuation because of the overall complexity of the regime,” Mr Hall said.

Besides removing the taxation impediments of superannuation, the AICD also wants the role of the newly created Inspector General of Taxation to be defined.

The institute is concerned with the number of administrative bodies handling taxation administration issues.

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