I’ve often said I am not a conspiracy theorist, but I have to say recent events in Canberra can only have fuelled speculation the superannuation industry will be facing outright domination by industry funds should Labor win government next year.
Unfortunately, you may not have heard very much about the most recent plans the federal opposition has for your retirement savings as it has remained largely unreported and certainly has not been pursued. But don’t let this lure you into a false sense of security. Let me fill in the greater picture for you, starting with something you’re already familiar with.
Most SMSF trustees will no doubt have formed their own opinions about the proposed franking credit refund ban for certain members purely in pension phase. The suggestion from some industry stakeholders is that this policy is aimed at ultimately reducing the number of SMSFs currently in existence.
This may seem on the surface a bit of a long bow to draw, but it appears the plan is already beginning to take effect. At the recent Chartered Accountants Australia and New Zealand SMSF Conference in Melbourne, real-life examples were provided where some SMSF trustees, perhaps not as in tune with political events as others, had sold off their positions in Australian equities and shut their funds down because they thought the policy was already in place.
As an alternative, some, if not all, of these individuals had rolled their retirement savings balances into industry super funds.
The bit you may not know about came to light in late October as part of the fallout from the banking royal commission. During the inquiry, information came to light that some retail super funds, owned and run by the banks, had been performing poorly within their peer group and compared to the industry funds without prompting the banks to move customers away from these offerings.
In response, opposition leader Bill Shorten strengthened his calls to remove the rights of banks to manage superannuation funds. As reported in other news outlets, this had only been floated as an idea previously, but now had firmed into a suggestion the administration and trusteeship of superannuation funds be taken out of the banks’ hands.
Now I realise this action will not put an end to retail super, but it will significantly change the landscape of how these funds operate and what they represent for consumers.
And the one sector in all of this that always remains untouched is the industry super fund space. With drastic changes happening all around, it stands to reason this area of the retirement savings landscape will go from strength to strength.
These developments highlight the need for a strong voice from all players in the SMSF sector to reject bad policy that stands to penalise self-sufficient superannuants who have done the right thing by themselves and the greater Australian public over the years.
Choice has always been a main tenet of the domestic superannuation system and has actually played a significant role in the success and growth of the SMSF sector. And this has been achieved without heavily funded publicity campaigns, such as the compare the pair ads, or any sort of significantly coordinated promotion, meaning people in the main have chosen to have one because they are so effective in delivering what is sought after.
The elimination of choice should never be allowed to occur, nor should the white-anting of SMSFs. If anything, SMSFs are the shining light of the system and should be encouraged and celebrated rather than hindered.
On a positive note, there is still a lot of water to pass under the bridge before the next election and the subsequent tabling of the new imputation credit refund policy.
For the sake of SMSFs and the system in general, let’s hope common sense prevails and the current treatment of dividends will be left untouched.