ING has called for a major overhaul of longstanding components of superannuation in its submission to the Cooper Review.
Among its recommendations, ING canvassed the removal of the existing trust/trustee structure for super, claiming there were questions about the appropriateness of the model “given the nature of today’s public offer and other large super funds”.
“In an environment where most superannuation funds provide a level of investment choice, there is scope to question the relevance of the trust model for superannuation,” ING’s submission stated.
One option, according to ING, would be to allow providers to move to a model without a superannuation trust and trustee.
“In practical terms, we believe there is merit in allowing [Australian Financial Services Licensees] to offer a financial product for both superannuation and managed investment purposes,” ING stated.
The group said product rules for superannuation could be managed by the Australian Financial Services Licence, meaning consumer protection and prudential supervision were not diluted.
However, the group noted that “mandatory removal of the superannuation trust … may be disruptive for some and may not be justifiable”.
In its submission, ING also suggested a removal of the work test and rationalisation of the preservation rules.
ING said while the work test is relatively easy to administer, it is a test that “catches out clients and advisers every year”, and sees clients enter “notional employment arrangements” solely to facilitate a superannuation contribution.
Super fund members must satisfy gainful employment work tests in order to contribute to super from age 65 to age 75.
ING also called for simplification of the preservation rules as the development of super over the years meant few members would still be affected by the preservation rules.
“Any rationalisation would be to split a person’s benefits into preserved and non-preserved components as at a particular date without the need to refer to those rules, which have little application for the vast majority of fund members,” ING said.
