The FPA has taken issue with a number of recommendations made by the Henry tax review panel, claiming four proposals were of serious concern for its members and their clients.
The four recommendations the advice association focussed its second submission on were: superannuation guarantee, voluntary saving, preservation age and longevity insurance.
“We have serious concerns about the panel’s recommendation to leave the superannuation guarantee at 9 per cent,” the FPA’s submission released last week said.
“The report asserts that such a rate of contribution, considered in conjunction with the age pension, is expected to provide the opportunity for people on low to average wages with an average working life of 35 years to have a substantial replacement of their income.
“Moreover, we have concerns that the modelling and projections used in the report may underestimate what is truly adequate to finance one’s retirement.”
In regards to voluntary saving, the FPA said the report appeared “to avoid making recommendations to improve voluntary saving”.
Another concern for the association was the lack of action many Australians were taking in planning their retirement.
The decision by the panel to increase the superannuation preservation age to 67 years has also been a source of significant anxiety for members and their clients, the association said.
“We encourage the panel to carefully consider whether the potential fiscal benefits from an increased preservation age that extends to voluntary superannuation contributions outweigh the disincentive to save through superannuation,” the FPA said.
The FPA also raised concerns about the panel’s preference for a sizable government role regarding insurance in retirement.
“Such an approach would place unnecessary risk on government/public finances. Australia’s robust private insurance industry is well positioned to address these issues,” the association said.
“To enable it to do so, the panel should focus its efforts on addressing the complicated legal regime applicable to product development in order to facilitate innovation in insurance products.”
