May 10: Following the release of the 2011 Federal Budget, industry experts share their instant views on what implications the budget will have on the superannuation sector, which included changes to self-managed funds and co-contributions.
MELINDA HOWES, CHIEF EXECUTIVE, INSTITUTE OF ACTUARIES OF AUSTRALIA
"The excess contributions are very welcome, it was an out of proportion penalty that wasn’t really the intention of the original legislation. A lot of people are only finding out now that they’d been caught up in it [the excess contributions]. I know a lot of people who have fallen foul of it.
"The thing that we were devastated about was that there was nothing there on longevity [of retirement savings].
"We’ve only seen one pleasing thing [regarding longevity] which is encouraging older Australian to participate in the work force, that they’re able to earn up to $250 a fortnight, before they’re affected… It does help, because it means people can get a part time job to fund their retirement.
"We had made some recommendations [regarding longevity]. We would have expected, given the size of this problem, and given the babyboomers are starting to retire now, that there may have been some more initiatives around assisting them."
ROBERT JEREMENKO, SENIOR TAX COUNSEL, THE TAX INSTITUTE
On Superannuation and the reform of excess contribution regime: "These are people who are saving diligently for their retirement... It was the highest tax rate on superannuation in the world, and the government has moved to do something about it.
"It was a sensible move that will benefit 24,000 people."
DAVID KNOX, SENIOR PARTNER, MERCER
On Superannuation reform: "There were a number of what I might call technical adjustments to super. Some of which make sense, some of which are disappointing.
"The reform of excess contributions was helpful for some individuals, but you can only use it once so it has limited impact.
"I think what it’s designed for is individuals who go over by accident … It gives individuals a buffer zone, so if they exceed it in one year, they have the opportunity to go back to their fund.
"It helps some individuals, but it hasn’t solved all the problems.
"Our thinking is that this constant minor tinkering with the system gets in the way of people having long-term confidence in the system. They are only technical adjustments, but what we want is a system that’s there for the long-term."
On infrastructure and encouraging superannuation funds to invest: "I think the development in the infrastructure space was important. To encourage super funds to invest in infrastructure was a very positive move. This country needs more infrastructure and super funds are well placed to do it.
"Infrastructure Australia got more money and they seem to be working on a more coordinated approach to infrastructure which is good. But will it drive more dollars from super funds to infrastructure development? Time will tell. From our view, it’s a positive step. But it will be a gradual development."
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