Editorial - Superannuation e-news December 2007

Whilst the outgoing government deserves much credit for Better Super, the incoming Prime Minister also deserves some mention.
On taking over the reins as Opposition Leader he immediately confirmed his Party's support for Better Super. Up to that point no announcement had been made either in the affirmative or the negative thus being conspicuous by its absence. We therefore might expect no major changes to Better Super in the foreseeable future and with a lid placed on legislative risk some certainty prevails. The history of superannuation is littered with different regulations, exceptions and a litany of superseded rules many of which are grandfathered. Hardly has one set been bedded down when changes are introduced frustrating members and increasing complexity - this is a big turn-off and an unnecessary burden. The government should build upon Better Super and provide reasonable lead times when it proposes improvements. We think that Mr. Rudd's earlier decision is a good omen for superannuation and wish the new government every success.
The area of superannuation in need of attention relates to individuals with low retirement savings. If the ideal of transitioning a lot more people to self-funding is to be realized a greater focus on this group is necessary. This is the group that we previously identified as receiving very little from Better Superand unfortunately it also involves an area that may prove difficult to resolve adequately.
The current system works well where funds exist or where a reasonable future employment income can be tapped for superannuation contributions. Where such a capacity is limited more creative policies are necessary and a targeted use of tax incentives and a more directed co-contribution system could be a starting point. The government could act by reviewing the co-contribution scheme in relation to size, member contribution and eligibility. Co-contribution is an area that the new government also identified previously as being in need of review and we support this.
The other areas of interest earmarked for attention relate to improving the current system. These include the automatic consolidation of lost accounts, streamlining and improving the quality of disclosure documents by retail funds and the introduction of some meaningful and simple forecasts for superannuation outcomes. These may prove to be practical ways to re-focus the minds of those with low account balances to increase their retirement savings.
On a separate issue we should remind members that there is respite for taxpayers who failed to provide a Tax File Number to their Regulated Fund or Retirement Savings Account (but not SMSF) for the fund to accept a government co-contribution. This is for member contributions made before 1 July 2007 and follows APRA's announcement of 20 November 2007. The TFN requirement remains in force for future co-contributions.
To conclude for 2007, Season's Greetings to all, have a safe break and we'll renew our service in the New Year.