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Super expert urged for Financial Systems Inquiry panel
The Australian Institute of Superannuation Trustees (AIST) has urged that a superannuation expert be included on the panel overseeing the Government's Forthcoming Financial Systems Inquiry.
The recommendation is contained in a submission to the Treasury responding to the Government's draft terms of reference, with the AIST also seeking to persuade the Government to make the risk inherent in self-managed superannuation funds (SMSFs) a key issue for review, referencing "an examination of the potential impact of Self-Managed Superannuation Fund failure on funding the age pension".
The submission, signed by AIST chief executive, Tom Garcia, then goes on to note the "usefulness" of SMSFs to some sectors of the Australian population but to also point to their regulation by the Australian Taxation Office (ATO) and the possible systemic risks.
"A feature of past financial system reviews was to examine major changes since the last review," the AIST submission said. "One such major change is the growth of Self Managed Superannuation Funds (SMSFs). Since June 2000, the amount of retirement moneys within SMSFs has grown from $74.9 billion to $531.5 billion in September 2013.
"AIST recognises the usefulness of SMSFs to sectors of the Australian population. However, given that SMSFs are now a significant component of the Australian retirement system, an examination of the regulation of SMSFs as well as systemic risk would be timely," it said.
The AIST submission also calls for the Financial System Inquiry to investigate the legislative and tax settings around annuities.
"AIST advocates that where appropriate, the legislative and taxation environment for retirement products and various sectors within superannuation must be on an equal playing field," it said. "AIST supports a review of the legislative framework for Annuities (forming part of the Post Retirement and Superannuation Sustainability Review), so that members are incentivised to take up all or part of their retirement benefit as an annuity."
However it added that, in saying this, AIST recognised that members with amounts lower than the "Adequacy Benchmark" should not be penalised for taking part or all of their benefits as an annuity.
In calling for a superannuation expert to be on the inquiry panel, the AIST submission noted the level of funds controlled in the sector.
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