Flexibility needed for ‘fluid’ retirement lifestyles: SMC

The Super Members Council (SMC) has called for the Federal Government to relieve the complexity surrounding superannuation fees for retirees who choose to continue working.

In what would be a “minor” change to the Superannuation Industry Supervision Act, the SMC has requested that Australian retirees who choose to continue working part-time are no longer required to open a separate account for their superannuation contributions earned, and instead are able to make the the payments straight into their retirement super accounts.

This would eliminate the second set of super fees retirees who work are forced to pay, which would benefit over 100,000 individuals according to SMC data and research.

“As more than 2.5 million Australians approach retirement in the next decade, the focus needs to be on making the system easier, simpler and allowing greater flexibility,” Super Members Council CEO, Misha Schubert, said.

“Increasingly, many Australians want to dip back into the workforce from time to time after they start their ‘capital R’ retirement. But instead of making that process easy, currently they must open a second super fund account, with the administrative hassle of transferring money across into their main retirement account, and they pay extra fees – and perhaps more tax – than they need to.

“The easy fix is to legislate for Australians to be able to make super contributions from part time work and other sources straight into their retirement account. This simple red tape busting reform would make retirement easier and more flexible for tens of thousands of Australians.”

The data, deidentified from a super fund that is also a member of the SMC, showed 25 per cent of Australians continue to work into their early 70s and that 25 per cent of the super fund’s members set up new accounts to accept super contributions from jobs and then “commute” to a new retirement income account.

The SMC’s suggestions to Government included:

• “Swiftly consult and legislate the retirement and super component of the financial advice reform package before the end of this year
• Make it easier for members to switch into retirement products – and end the current ban on being able to add contributions to a retirement-phase super account
• With member permission, the Government should notify super funds about their members eligibility for pensions and other government supports, so members can be given tailored information on how to maximise their retirement income
• A comprehensive retirement test for super products should be developed that measures a broad set of factors including investment performance, flexibility to access funds in retirement, and giving people control over the level of risk they want; and
• The Government should not mandate the use of annuities for members or cohorts of members. Trustees are best placed to create investment strategies for their members.”