Super sector unites on post-retirement contributions
Superannuation funds and the major superannuation lobby groups are presenting a united front to the Government for regulatory changes to allow contributions to be made from pension accounts.
Industry funds such as Rest have used their pre-Budget submissions to Treasury to back the regulatory changes and both the Super Members Council (SMC) and the Association of Superannuation Funds of Australia (ASFA) have made identical calls.
The move is being interpreted by some as a means of superannuation funds extending their engagement with members beyond retirement.
The SMC, representing the major industry funds, described the current regulatory regime as out of date, while ASFA has suggested as many as 700,000 people “might benefit from there being only one superannuation account for life”.
“There currently are nearly 700,000 Australians aged 65 and over who hold accumulation superannuation accounts and who have employer or personal contributions made to their accounts,” ASFA said. “Such individuals automatically qualify to open a retirement income account but they need to maintain an accumulation account as well for contributions to be made.”
“Some individuals will retire and move their savings into pension phase but then return to work. Also, there are individuals aged under 65 who have a pension account after establishing a condition of release but who subsequently have contributions being made in regard to them,” it said.
“The overall cost and complexity for individuals of superannuation arrangements would be reduced by allowing individuals to have just one superannuation account for life (subject of course to individuals being able to exercise choice of fund). This would include allowing individuals to make contributions directly into a pension phase superannuation product,” it said.
“Such a change would be much simpler for members compared to the current requirement for a member to close a pension account and then start a new account if they want to top up their pension account,” ASFA said.
SMC’s submission also noted that a significant proportion of retirement are forced to have two super accounts – one to accept contributions and one to draw an income.
“Making this change would remove duplicate fees for about 100,000 retirees, slashing red tape and save retirees time and hassle,” it said.
It’s a great idea, but the government will baulk when Treasury tells them the enormous ‘cost’ in lost taxes.
So the same Industry Super Funds that can’t work out taxable income per member, thus want Unrealised Capital Gains taxed for members over $3 Mill.
Now they want Taxable and non taxable contributions to be mixed into a tax free pension.
With taxable contributions currently treated as income to an accumulation account and taxed at 15%.
So how are Industry Super going to contribution tax from tax free pension income, only the taxable contributions ?
Would seem these ISF clowns have a single focus on FUM retention with zero idea of reality.