The Federal Government will increase the momentum for superannuation reform with renewed efforts to implement its election promises.
Announcing a revitalised approach, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan said the Government is strongly committed to superannuation policies that will enhance the opportunity for Australians to save for their retirement.
"The Government remains committed to a range of initiatives that will further develop superannuation and which are directed to ownership, safety, reducing the extra impost caused by the surcharge and helping low income earners," Senator Coonan said.
"A sense of ownership is vitally important to encouraging people to think about their superannuation and plan for retirement," Senator Coonan said.
"The Government is, therefore, committed to giving superannuation fund members the right to decide where their superannuation contributions go. We will give them the right to move their superannuation savings from one fund to another, if they wish to do so, through the implementation of our Choice and Portability policies," Senator Coonan said.
"This is about allowing Australians to take charge of their own superannuation savings."
To progress portability, the Government will release regulations which give rise to the proposal later this week. A final series of consultations will occur before the regulations are gazetted in June.
"The Government is also releasing details of important changes to the Choice of Superannuation Bill that will be debated in the Spring sittings. The changes will make it easier for employers to meet their obligations and for employees to choose a fund," Senator Coonan said.
"It is hard to believe in this day and age that anyone could seriously suggest that you cannot have a say about where your own superannuation money goes," she said.
"For those who are happy with their current arrangements, there will be no need to change funds. But, for those with money trapped in poorly performing or expensive funds, the needs of these members to protect their retirement nest egg should not be ignored."
"The Choice and Portability proposals will be implemented in the context of a substantial education campaign, for which $14 million has already been set aside. Consumer interests will be enhanced through improved financial disclosure arrangements. These arrangements are being introduced as part of the new Financial Services regime which will be fully operational by March 2004," Senator Coonan said.
The need to give Australians a greater sense of ownership will also be assisted by the Government's proposal to allow the splitting of superannuation contributions.
This will allow fund members to split their superannuation contributions with their spouse if they so choose. For example, it will enable a spouse working in the home to continue to build their own superannuation savings even though they may not have an income.
These measures build on recent changes that require employers to inform their employees of superannuation contributions made on their behalf.
"The splitting measure will continue to be developed in coming months and will give Australians, who might not otherwise have the chance to accumulate superannuation, a golden opportunity to establish their own retirement nest egg," Senator Coonan said.
"To help low income earners, the Government remains committed to a new co-contributions scheme. Under the scheme, the Government will make matching superannuation contributions of up to $1,000 - a commitment that has been on the table since the last election and was warmly welcomed by the industry," Senator Coonan said.
"This is a great improvement on the current rebate system. It is more generous and can substantially improve the retirement savings of people earning up to $32,500 per year."
Along with the new co-contribution scheme, the Government will press ahead with its election promise to reduce the superannuation surcharge. Over three years maximum surcharge rate will be reduced from 15% to 10.5%. Legislation for both measures will be re-introduced into the House of Representatives in the winter sittings.
Following the recent announcement relating to the Superannuation Working Group, and its proposals to strengthen the safety of superannuation, the Government is engaged in consultation on a number of proposals which will deliver greater certainty and confidence in the superannuation system. .
Senator Coonan said that all of these measures were designed to take superannuation forward.
"It is a great shame that the benefit of the co-contribution and surcharge reduction incentives are being denied by the opposition parties in the Senate," Senator Coonan said.
"Opposition promises to improve superannuation ring very hollow indeed when for several years Labor has been blocking measures that will give workers choice over where they invest their own money."
"This is where the rubber hits the road. These are sensible ways to improve the retirement incomes of Australians and they have been budgeted for and are ready to go. There is a clear way forward and the measures deserve to be supported," Senator Coonan said.
Media Contact: Bob Lawrence (02) 9223 4388 or 0438 690 305
What is Choice?Choice of fund will provide employees with the right to choose the superannuation fund that will receive their superannuation guarantee (SG) contributions. Choice will also benefit Australians by creating greater competition in the superannuation industry, placing downward pressure on fees and charges. What is the Government Doing? A Bill to provide employees with Choice of fund was introduced into parliament 27 June 2002. Following extensive consultations on the original policy the Government will be amending its Choice Bill. The details of these amendments are outlined below. When is it all happening? Consultation on the amendments will begin shortly and the Government plans to debate the Choice Bill in the Spring sittings. The commencement date for Choice remains 1 July 2004. |
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Default funds
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Penalty provision
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Employee information
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Choice process
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What is Portability? Portability will allow Australians to transfer benefits from their current superannuation fund to a fund of their choice. This will allow members to consolidate their superannuation benefits into one fund if they so wish. Maintaining superannuation benefits in multiple funds can significantly erode an employee's retirement benefit and lead to lost superannuation accounts. Portability will also benefit Australians by creating greater competition in the superannuation industry, placing downward pressure on fees and charges. What is the Government Doing? The Government will introduce Regulations to give effect to Portability. When is it all happening? Consultations on the Regulations will begin from 26 May. The Government proposes to gazette the finalised regulations in June. The commencement date for the Portability measure remains 1 July 2004. |
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What is the Government Co-contribution? The Government Co-contribution will provide a benefit to lower income earners who contribute to their superannuation. A maximum of $1,000 per year is available to lower income earners on up to $20,000. A Co-contribution is also available to people on incomes of up to $32,500 on a phased basis. The Co-contribution replaces the less generous taxation rebate of up to $100 that is currently available to lower income earners who contribute to superannuation. What is the Government Doing? The Government will reintroduce legislation to implement the Co-contribution. When is it all happening? Legislation will be introduced in the Winter sittings with the intention of passage through both houses of parliament before 30 June. The commencement date for the Co-contribution measure remains 1 July 2002. |
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What is the Surcharge Reduction? The Government's Surcharge Reduction measure is designed to encourage those Australians who can afford to save for their retirement to do so. It will reduce the maximum superannuation surcharge rate, an additional impost on the superannuation savings of higher income earners, from a 15% to 10.5% over three years. What is the Government Doing? The Government will reintroduce legislation to implement the surcharge reduction. When is it all happening? Legislation will be introduced in the Winter sittings with the intention of passage through both houses of parliament before 30 June. The commencement date for the Surcharge Reduction measure remains 1 July 2002. |
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What is Superannuation Splitting? The Government's Superannuation Splitting policy aims to assist families to maximise the benefits available in superannuation and to provide an avenue for spouses to share their superannuation benefits equally. This measure will allow both spouses access to a separate tax-free threshold and Reasonable Benefits Limit (RBL), thus ensuring that single income families, including those not able to make voluntary contributions have access to two RBLs and tax-free thresholds in the same way as dual income families. What is the Government Doing? The Government will be consulting further with industry to progress this policy in the near future. |