Editorial - Superannuation e-news June 2008

As we've mentioned elsewhere, the recent budget had no surprises in relation to superannuation and generally met our expectations. We are heartened that the government has avoided any temptation for significant change. It gives us breathing space to bed-down Better Super and it ameliorates legislative risk that inevitably rises upon a change in government. We support the proposed legislation enabling the terminally ill to withdraw their superannuation savings tax free if they are under 60. This is really an overdue amendment to Better Super, receiving bipartisan political and widespread community support. The government should be applauded for back-dating it to 1 July 2007, ensuring that essentially the entire new regime relates to this single date, simplifying ongoing administration.

Some flesh has now also been put on the bones of the First Home Saver Account package aimed at assisting those saving for a first home. Unfortunately the date of introduction has slipped by a quarter due to industry consultation so it is now proposed to commence on 1 October 2008. Whilst by no means perfect, it is now a better package than the earlier offering and the delay is worth it because it is now simpler and more empathetic to savers. The exclusion of SMSFs is still of concern to us.

The Clearing House proposal mentioned in the budget reflects the government's perceived need to assist individual small businesses to meet their Super Choice obligations in respect of employees. This is an optional service, free to small business and seems a sensible initiative. The proof of the pudding is in the eating, so let's wait until more is known about it or once it's operational before we comment further.

The government is rightly frustrated by the extent and significance of the level of "lost super" in Australia. This is represented by superannuation accounts that appear to be unclaimed by their rightful owners despite campaigning by government and certain superannuation funds for members to reclaim these accounts. Recent studies suggest that "lost super" represented about $11billion at the end of June 2007. For governments serious about encouraging the community to save for retirement it is perfectly understandable that they seek to rectify this anomaly and the Tax Office is now embarking on a "super advertorial" to raise awareness of "lost super". It is simply called "Tips for retirement" and provides some very basic knowledge in order to steer our general sense of superannuation. The campaign will appear soon and we urge individuals to step up and claim their "lost super".

Remember once again, the onus is now on members to monitor and manage their super contributions within their respective caps. Those who are careless, particularly with last minute contributions, will be harshly penalized if the applicable limits are exceeded.

Finally, leaving aside structural issues afflicting our economy, the nexus between higher energy prices and higher living costs is clear. But the highly charged debate around a 5c/litre relief at the pump pales into insignificance in light of the recent massive petrol price hikes, despite the cushioning effect of a very strong Aussie dollar. Retirees spend proportionally more on living expenses and will therefore be squeezed. Politicians must recognize this if they are to act to safeguard the living standards of retirees.