In a recent article in the Australian Broker magazine it was reported that the ABA says banks are receiving ‘numerous’ inquiries from customers worried about their retirement security because of potential increase in taxation on superannuation.
Steven Muchenberg, chief executive of the ABA, says the organisation has been advised by banks that many customers are concerned about their financial security in retirement because of speculation the Government plans to increase the level of tax on retirement savings.
“Successive governments have rightly urged Australians to save for their retirement. The current government has said its previous superannuation reforms were directed towards increasing the savings and security Australian have in retirement. The proposal now being considered appears to reverse that approach. On-going speculation and change undermines confidence in superannuation, discouraging Australians from making voluntary contributions and raising uncertainty over whether superannuation delivers the financial security customers are looking for.” Unfortunately, if they only rely on compulsory super contributions from their employers and don’t make any voluntary contributions, most working people will be well short of what they need for a decent standard of living after they leave the work force. Reducing the incentive to save for retirement will have the effect of increasing the Government’s pension bills in the future.” He says the politicians need to align with one another in order to maintain a general feeling of security amongst the nation’s work force. “Bank customers need a commitment from both major parties that they will not make continual changes that undermine the security that superannuation is meant to give Australians who have worked and Munchenberg says that while the prime minister has ruled out mooted tax changes for withdrawals by those with higher balances, the ABA recently saw media speculation that changes in the rules around self-manages superannuation are now being considered by the government.” “To many rule changes in superannuation undermine confidence in the system. With an ageing population and people expected to live longer, it should be an overriding priority of any government to encourage people to make provisions for their retirement, rather than rely on future taxpayers to fund them. Constant change to the superannuation system and increased taxes that reduce retirement incomes create uncertainty and work against the objective.” He says Australians relying on their employers to fund retirement face a rude awakening.
John Whitten can be contacted on 0749722081 or 0410433919. You can also email him at jwhitten@ihl.net.au or look him up on the net www.ihl.net.au. John Whitten is a credit representative (CRN 399796) of BLASSA Pty Ltd (Australian Credit Licence No 391237).
