Jones accuses doctors, surgeons of ‘gaming’ super
In what represents a significant escalation of the Government’s rhetoric around superannuation, the Assistant Treasurer and Minister for Financial Services, Stephen Jones, has accused surgeons and medical practitioners of ripping off superannuation.
In an address to a Sydney forum, Jones said he was calling out unconscionable behaviour in the private sector.
“There are surgeons and medical practitioners who view super as their personal river of gold,” he said. “They are encouraging, and even pressuring, patients to tap into their super for what might be termed life-enhancing procedures like cosmetic surgery.”
Jones said there were “business models set up to game the system”.
“This is deeply troubling and I am calling this out.It is greedy. It does not pass the pub test. It is wrong. This is the practical impact of a policy space that lacks objective,” he said in reference to the Government having proposed an objective of superannuation.
“And it’s why the objective of superannuation needs to be simple and solely focussed on bettering and ensuring retirement incomes.”
Jones accusations with respect to doctors and surgeons has come at the same time as the debate between the Government and the Liberal/National Party has ramped up over the use of superannuation for housing deposits and with respect to superannuation early release.
He said that the Government needed to legislative the objective of superannuation to stop governments trying to use superannuation for anything but retirement incomes.
At the same time, Jones made clear that the Government would be retaining the Your Future, Your Super performance test legislated by the former Liberal Coalition Government.
However, he signalled that some changes were likely as a result of the recent Treasury review of the performance test methodology.
“The performance test is here to stay. It would not be consistent with the objective of superannuation to remove the performance test,” he said. “Just as Governments will be held to account when the objective of superannuation is legislated so trustees will continue to be held to account for their performance with members funds.”
You can argue that accessing super, for gastric operations, is justifiable because without the operation, an obese person may not live long enough to ever access their super. The First Home owners Scheme allows access to people who may never otherwise get into the housing market. But for cosmetic surgery? Hmm.
Me thinks he does have a point, although he could be accused of making that point because of Labor’s association with the ISN funds.
And he obviously is targeting the $35 billion that disappeared out of super funds in 2020 in two tranches of $10,000 each without any evidence of financial stress being requested. I’ve long held the view that the concept was an act of political barstardtry, deliberately designed by the Coalition to undermine the ISN funds.
Anecdotally, it would appear most of that $35 billion was either put into accessible savings (and now, being spent to keep our inflation rate up a little) or more likely into “investments” such as restored veteran and vintage motorcycles and cars. That market definitely inflated in the months following the highly accessed money from super. There were also lots of new kitchens and bathrooms and visits to Harvey Norman.
And, anecdotally again, he may have a point about plastic surgeons gaming the system.
But if he is in a zealous mood, perhaps he can legislate to tighten up the use of member-driven profit to sponsor football teams and stadiums. I personally find that an appalling use of funds – superfunds live or die on performance and fees, not on advertising. While they’re at it, he should prohibit the payment of referral fees to the unions where shop stewards spend time convincing fellow workers not to leave a particular super fund for another offer.
Mr Jones could also address the appalling matter of default life cover offered by superfunds. Either they do it properly or they get out, because what passes for death and TPD cover in this country, as made available by the ISN funds, is an absolute joke.
And in passing, I expect one of the matters he will address is the current practice of allowing annual rollovers from super fund accumulation to pay premiums for life risk products in a super environment from a retail provider. The ISN funds have always hated this “benefit”. In my view that never passed the pub test. Might upset a few insurers though!
I’m not sure I understand the direction you’re going with insurance in super. It make complete sense to fund life insurance for a spouse and young families benefit through super. Where a new migrant (and there are many) are unsure of their financial cashflow, it also makes sense to purchase their income protection in super initially until they are more accustomed to their financial matters.
Where platforms are concerned who do not offer insurance, the retail space is important for them to acquire certain levels of insurance using their super – they can also change platform without having to redo underwriting as they can retain their retail insurance. Not a bad outcome.
Retail insurers have rorted the system in the most recent 5 years and this has led to insurance premiums eroding contributions. Probably why I last write any retail insurance before the start of covid.
You were doing well until the last paragraph. Are you saying a super fund member should only have access to the insurer the super fund has chosen to use? Why shouldn’t a member be allowed to rollover an annual premium to the life insurer of their choice? You also say retail provider. How many union owned life insurers are there? Rolling over to an insurer who holds nothing but the policy under the trustee is by defintion a rollover to a retail provider. What else is there? I think you need to research this further, as you seem to understand it as much as the average bloke in the pub.
Yes, Jones wants you to remain visibly ugly until 60, when you can finally access your own money via a TTR Pension (or to pay off a home mortgage). The amount of money you can draw for cosmetic surgery is still under $10k, which is a pittance in the scheme of things
It’s obvious his union fund masters want to make sure they don’t have another run on their FUM again. Remember it is the union funds money, not the member, and it is required to fund things like sponsoring sports clubs, corporate boxes, false advertising, etc which surprisingly Mr Jones doesn’t seem to have a problem with..
Oh Researcher, you are a person after my own heart. I’ve been wondering out loud for years about the same things.
How the heck (trying to be polite here) is it okay for industry super funds to widely and falsely advertise, brand buildings & cars, as well as sponsoring events and sporting teams using, wait for it…members funds…and still be “for the members”? I call BS, because they can’t. The nature of these acts are in conflict with their claim of being “for the members”
Talk about gas lighting
The government are worried about performance, how about get some set rules around unlisted assets so cowboys like Hostplus can’t keep gaming the system. Then ask the RBA for a bailout when people want to withdraw their money…. We didn’t forget about you little show during covid.
I have to agree with the minister on this one. Hearing ads from dentists and surgeons promoting early access to super to pay for treatments is not a good look. Those practitioners have shot themselves in the foot I think. We all know you’re doing it but don’t broadcast it in a radio ad. Not smart.
Scrap the system, pay everyone back what they have worked for in yearly instalments so that it is not inflationary, it is the worker’s money after all. Not for super fund companies to boast about their FUM. The Age Pension system works fine and no board of directors, investment managers, trustees needed to be involved in milking the system. The real winners of the super system are not the workers, plain and simple.
You know age pension is paid from Gov general revenue, i.e. taxes paid, right? That’s why it ‘works’ – badly and under increasing strain but works for now.
Your idea still doesn’t solve the problem of where the SGC and other contributions goes.
However, along your lines of thinking, having a national ‘future fund’ style super scheme without unions, FSC or super companies etc involvement would be something that possibly has legs.
Government funding is where the Treasury (with approval from Senate and House) instructs the Central Bank to mark up numbers on a computer screen on Exchange Settlement Accounts that commercial banks (e.g CBA, NAB, WBC, ANZ, etc) hold with the RBA. This is how all government spending is done. Federal Taxes have a different role in the modern economy, that act to incentivise/disincentive certain activities (e.g property speculation or tobacco tax). I wouldn’t go for the Future Fund model, again, it rewards Peter Costello and his crew, board of guardians, investment managers – they have not even paid a cent to the intended beneficiaries yet. I wouldn’t be taxing worker’s income, instead I would rather tax the unproductive areas of the economy. Think of all the fees and taxes people pay on their hard earned salary via the superannuation system.
The display of Stephen Jones unconscious bias is, paradoxically, illuminating