Industry Super Network congratulates Australian Government on new superannuation laws

Industry Super Network congratulated the Government on the passing of two historic new laws in Parliament that will significantly improve the retirement savings of working Australians: the increase of the Superannuation Guarantee to 12 per cent and the introduction of the Low Income Super Contribution (LISC).

Read the Media Release here.

Historic financial advice reforms a win for Australian consumers

The passing of the Future of Financial Advice Bill in the House of Representatives last week is set to significantly improve the retirement outcomes of industry super fund members.

In an historic move for Australian consumers, the Future of Financial Advice (FoFA) Bills passed through the House of Representatives last week.

These reforms will significantly improve the retirement outcomes of industry super fund members, and consumers more broadly, and ensure that they can receive high quality professional financial advice that is in their best interests.

Robbie Campo, Manager Strategy, said that while the reforms are moderate, they represent a comprehensive set of measures that will substantially deliver on the Government’s policy objectives to improve the quality of financial advice in Australia, strengthen investor protection, promote trust and confidence in the system, and encourage more people to seek financial advice.

“For the first time, financial planners will be required by legislation to act in the best interests of their clients, and sales commissions and other forms of conflicted remuneration will be prohibited,” commented Robbie.

“Importantly, the biennial ‘opt in’ requirement will ensure ongoing asset-based fees do not simply replicate trail commissions and unnecessarily reduce super savings.”

ISN supports the final proposal which will enshrine ‘opt-in’ in the law, but with the flexibility for financial planners and licensees to gain relief from ASIC if they sign up to an approved code of conduct.

“ASIC will provide relief to licensees and financial planners who are bound by an approved code of conduct, which obviates the need for the opt-in requirements,” said Robbie.

“This dual approach delivers protection for consumers and the opportunity for the financial planning industry to realise their objective to be regarded as a respected profession, an objective which is supported by industry super funds.”

Key aspects of the reforms

Best interests duty – requires advisers to act in the best interests of their clients. The duty provides some details around how an adviser can prove that they have acted in the client’s best interests by following a number of reasonable steps.

Opt-in measure – requires advisers to get consent from clients every two years to continue to charge ongoing fees for financial advice. Clients must be provided with fee disclosure in the intervening year. However, ASIC can exempt by class order relief any provider bound by an ASIC Approved Code of Conduct, which obviates the need for the legislative measure.

Annual disclosure – requires advisers to provide clients with an annual disclosure notice that provides information on  fees and services for the previous year, and also notifies them of their right to ‘opt-out’ of an ongoing advice contract.

Enhanced regulator powers – the Australian Securities and Investments Commission (ASIC) will have increased powers over the licensing and banning of financial planners with the capacity to refuse, suspend or ban a licence if an individual is deemed to have contravened or likely to contravene the obligations.

Ban on conflicted remuneration and commissions – under the new legislation, a range of conflicted payments will be banned, including commissions on investment products, commissions on risk insurance in MySuper and group risk products, soft dollar benefits and volume payments to employees and dealer groups.

Media Release: ISN congratulates Australian Government on new superannuation laws

Industry Super Network congratulated the Government on the passing of two historic new laws in Parliament that will significantly improve the retirement savings of working Australians: the increase of the Superannuation Guarantee to 12 per cent and the introduction of the Low Income Super Contribution (LISC).

Read the Media Release here.

Australian Government introduces Low Income Earner Government Super Contribution

More than 3.6 million Australians are set to benefit from the introduction of the Low Income Earner Government Super Contribution. This is a significant win for many low income workers who  until now, have not received any tax breaks on their super, says Matt Linden, ISN’s Chief Policy Adviser.

On 2 November, the Australian Government introduced the Low Income Earner Government Super Contribution into Parliament. The new legislation is designed to help low income earners save for their retirement by providing a tax rebate on their super of up to $500. The new legislation will apply to those earning $37,000 or less.*

Significantly, the Government has removed the requirement for low income workers to lodge a tax return to receive the contribution. Instead, the benefit will be determined by the ATO, based on an individual’s income and tax data.

Matt Linden, Chief Policy Adviser, Industry Super Network, said that the legislation is a great win for Australian workers.

“ISN has long advocated for tax concessions for low income earners on their mandatory super contributions, some of whom have been paying more tax on their super than on their ordinary income. This new legislation effectively abolishes the 15 per cent tax that is paid on low income workers’ super contributions, effectively making their super tax-free. This will make a big difference to workers’ final retirement savings.”

The new legislation, once passed by Parliament, is expected to benefit more than 3.6 million lower income earners and 2.1 million women.

To read the speech introducing the proposed legislation into Parliament, click here.

*However eligibility will be restricted to individuals with earned income in line with requirements for the Co-contribution scheme. Only individuals who earn more than 10 per cent of their total income from employment or business will be eligible. Temporary residents or those with an entitlement of less than $20 in any year will also not be eligible.

ISN applauds Superannuation Guarantee rise to 12%

The Government’s proposed increase of the Superannuation Guarantee to 12% is set to boost Australians’ retirement savings by tens of thousands of dollars. The move is to be applauded, says David Whiteley.

Industry Super Network (ISN) has congratulated the Government on the passing of legislation to raise the Superannuation Guarantee from nine to 12 per cent in the House of Representatives last week.

ISN Chief Executive, David Whiteley, said that in combination with the Future of Financial Advice and Stronger Super reforms, the new measure will improve the retirement savings of average Australians by tens of thousands of dollars.

“This new legislation moves Australia closer to a vastly improved retirement savings system,” he said.

“ISN has long advocated boosting the compulsory Superannuation Guarantee, while at the same time improving the efficiency and equity of the superannuation system through bans on commissions and improving tax incentives for low income earners.

“Increasing the Superannuation Guarantee contribution to 12 per cent will add tens of thousands of dollars to the retirement income of average Australians.

“In addition, more than 3.6 million lower income earners are set to benefit from the low income superannuation tax rebate of up to $500 per annum, once this has been passed by Parliament.”

David said that the entire package of reforms represented the most comprehensive improvement to the retirement savings system since the introduction of compulsory superannuation.

“Australians deserve a dignified retirement and these laws will complement the wider reform of the superannuation and financial advice industries to help deliver that outcome,” he concluded.

To read the speech introducing the proposed legislation into Parliament, click here.