Natasha Panagis, head of superannuation and financial services for the Institute of Financial Professionals Australia (IFPA), said the expanded memorandum to the exposure draft of the objective of super legislation indicates that the government views the superannuation system as an important source of capital for the economy.
Speaking to InvestorDaily’s sister brand, SMSF Adviser, Ms Panagis opined that the government has not been “shy” regarding its plans for the nation’s super savings. She highlighted the draft exposure in which the government suggests that super is an important source of capital in the economy which could be used to support investments in economic priorities.
“The IFPA sent in a submission in March in regard to the objective of superannuation stating that trustees should not be pressured into making nation-building investments,” she said.
“The government has been quite vocal on its plans to use superannuation for a whole range of things, and although some of them may be items that are socially equitable, like low-cost housing, we don’t support this idea for a whole range of reasons.
“The way the objective of super is framed makes it seem the government sees super as the answer when it faces a funding shortfall. Ultimately it sees it as a pool of capital.
“The IFPA believes this money is for retirement and members’ own needs – not to be used for nation-building”.
Ms Panagis further opined that now that the super system is worth $3.5 trillion, “it is way too tempting for the government to ignore”.
She shared that the IFPA is opposed to policies or measures that restrict how people save for their retirement, alluding to comments made by Assistant Treasurer Stephen Jones in August that a national conversation should be had about drawing on super balances to support people in aged care.
His comments followed an issues paper by the Aged & Community Care Providers Association (ACCPA) that explored whether super could be ring-fenced towards aged care funding.
“Getting retirees to make minimum drawdowns is OK, but another set of rules on how they can spend their retirement savings is going to create more complexities in the system,” Ms Panagis said.
“It is not the government’s place to ring-fence super, it is not up to the government to tell people how to live and what their aged care needs may be.
“Anytime a proposal like this is introduced into legislation it will lead to complexities in administration and is costly to implement.
“We don’t want to see the government turn superannuation into a political football, but it keeps moving the goal posts based on its fiscal needs at the time.”
Push towards SMSFs
Ms Panagis believes the uncertainty around what the government plans to do with super will push more people towards establishing an SMSF.
“Instead of mandating or legislating to ring-fence superannuation for aged care or use it for its own purposes, we urge the government to look at other options, like wholistic tax reform, means testing or a user-pays regime,” she said.
Meanwhile, the Association of Superannuation Funds of Australia (ASFA) has also called on the government to think more innovatively to address the growing aged care needs of Australians. It said that ring-fencing superannuation for aged care costs would create unnecessary complexity and reduce flexibility for older Australians.
ASFA deputy chief executive officer Glen McCrea said superannuation is there to assist people with handling the unforeseen challenges that life and retirement invariably bring.
“Many current retirees do not have a large amount of superannuation from which to fund increased aged care costs. In fact, only a small minority of Australians aged over 80 have any superannuation at all,” said Mr McCrea.
However, ASFA believes there are possibilities for super funds to play an important role in helping meet the future aged care needs in Australia, by providing investment capital and by holding direct or indirect interests in the property assets used to provide aged care accommodation services, on commercial terms.
Mr McCrea said alternative capital arrangements could also be developed for aged care premises, such as the establishment of real estate investment trusts (REITs).
“Provided the return and risk profile was appropriate, superannuation funds potentially would be investors in assets which could hold residential aged care facilities and lease them to providers of aged care services,” he said.
Super was introduced as an individual’s savings to fund their life style in retirement. The objective is clear. There is no need to redefine super as a national and not just a personal asset, to be used by government for “nation building”. Every existing nation building project is late delivered and significantly over budget. Surely the public who own this asset through their own personal endeavors find this disturbing?
So if the Govt uses superfunds to facilitate industry or to boost the economy, will that reduce other expenditure and tax grabs to compensate – hardly likely when the Govt seeks to control the people.
Is it not up to the superfunds to choose where they invest and not to have a Govt or political mandate.
ALSO : whilst super capital and returns are low (or even high for that matter) don’t you think Superfund providers should not be spending millions of dollars on sponsorships of other organisations and especially Govt events when it is not their money and/or their members political views in some cases. It may go to a better return on investment for the ones who own the monies.
SMSF …. here we come.
Stupid. All they will do is drive super money into US and UK life insurance.
good idea—let’s help build a strong nation with our capital that’s otherwise tied up for years!
All APRA Retail and Industry funds need to be made illegal and only SMSF be allowed to remain.