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ACTU Superannuation enews June 2010
Friday, 9 July 2010
Where does all the time go? It only seems like we recently returned to work, and now we are half way through the year with the Federal Budget having been delivered and a Federal election 'around the corner'. Much has happened since the March edition of Super e-news, and this edition focuses on some of the important issues including the Henry and Cooper Reviews. We also look at the upcoming 2010 ACTU Superannuation Trustees Forum, and the latest network news. As usual, we consider your input valuable, so be sure to send your thoughts on these issues to super@actu.org.au.
Editor: Gemma Pinnell, General Manager, ACTU Member Connect
KEY TOPICS
A commentary on issues of significance which have attracted attention recently.
Henry Review
The ACTU welcomed the announcement by government that it intends to increase the SG rate from 9 per cent to 12 per cent. This is the first increase in the SG rate for nearly twenty years and will make a significant contribution to helping millions of working Australians secure a more adequate retirement income. For example, it is estimated that when the proposals are enacted the increase will deliver an extra $108,000 in retirement for a 30 year old worker earning average full-time wages. Unions and many in the super industry have been campaigning long and hard for a higher rate. Given that Secretary to the Treasury, Dr Ken Henry, stated last year that he regarded 9 per cent as sufficient, unions should take some pride in having played a key role in convincing the government that an increase was essential. The ACTU and our affiliates will continue to campaign and bargain for higher super contributions.
Read more
Cooper Review
The review of the Australian superannuation system being led by Jeremy Cooper has published two important proposal papers in recent months: one on MySuper and one on Superstream. The ACTU has welcomed MySuper as a commonsense set of proposals that will protect the interests of the majority of fund members who do not actively engage in making decisions about their personal super arrangements. MySuper is in many ways a new name for what most not-for-profit funds already offer to default members. However, any fund which wishes to offer a MySuper product will now be required to meet certain minimum cost, governance and investment criteria. The overall aim is to reduce costs for members and to make sure that those who do not actively choose will always be in a fund that cannot exploit their lack of engagement.
Read more
NETWORK NEWS
A view from one of the entities established by the Industry Super movement in events currently important to it.
2010 ACTU Superannuation Trustees Forum - register now
The 2010 ACTU Superannuation Trustees Forum will discuss key issues for union trustees, focusing particularly on the proposed changes in the Cooper and Henry Review. The day will include a keynote address by Minster for Financial Services Chris Bowen, & a panel examining the critical issue of Environmental, Social and Governance concerns in investment. It will also feature an opportunity to hear from the new CEO's of ME Bank, IFM & IFS, and well as provide an important networking opportunity for union appointed directors on fund boards.
The forum is targeted at union and member appointed trustees from corporate, industry and public sector funds. Industrial officers, organisers and elected officials with an interest in or responsibility for superannuation are also encouraged to attend. This annual event attracts around 100 key union trustee and senior decision makers from our funds.
When: Thursday 29 July, 2010
Where: ANF, 1st Level, 540 Elizabeth Street, Melbourne
Registration: $125
Read forum agenda (subject to change)
Register on-line
COMPLIANCE CORNER
A list of matters which we would expect your fund to have alerted you.
The issues emerging since our last Super e-news that Trustees need to be aware of include:
1. Commencement of Loss Relief for Merging Super Funds -This measure was included in Tax Laws Amendment (2009 Measures No. 6) Bill 2010 which was passed by the Australian Parliament on 11 March 2010 and received Royal Assent on 24 March 2010.
2. Cooper Review reports: 22 March 2010 - Superstream-bringing the back office of Super into the 21st Century, 20 April 2010 My Super paper, 29 April 2010-SMSF’s should focus on the main game: retirement savings paper, Final paper on Governance to be released early in the financial year.
3. 26 April 2010 -Government response to Ripoll Inquiry The start date for most reforms is 1 July 2012-Upfront, trail and volume commissions are banned on all financial products except insurance at this time.
4. 2 May 2010-Government response to Henry Review-
- The SG rate is to be gradually increased from 9% to 12%.
- The SG age limit is to be increased from 70 to 75.
- The Government will make a superannuation contribution of up to $500 annually for low income individuals earning less than $37,000.
- Post 2012, persons over 50 with an account balance of less than $500,000 will have a concessional contributions cap of $50,000 a year.
5. ASIC has announced that it is developing a risk-based surveillance program which will mean increased visits to superannuation funds, ASIC will boost its surveillance of the super industry and aims to see all trustees within the next two years.
6. 5 May 2010 -correspondence from APRA to Trustee on Illegal Early release schemes alerting Trustee to a number of cases where fraudulent ATO correspondence is being used as evidentiary documentation to support rollover applications submitted to APRA regulated funds.
7. From July 2011 AUSTRAC will introduce a “user pays” model, charging reporting entities to register and file transaction reports. The funding initiative was part of the recent Federal Budget that will see AUSTRAC levy around $30m annually in fees to cover the cost of its regulatory activities. Under the proposed fee structure AUSTRAC will charge reporting entities a flat fee of $500 for registering with the regulator each year.
8. 12 May 2010-the Medicare Clearing House Legislation (Tax Laws Amendment (2010 Measures No.1) Bill 2010) was passed by both houses of Parliament with no amendments. The Clearing house will accept employer contributions from 1 July 2010.
Super Activist Talk Back
If I were Minister for Superannuation … I would have a lot on my plate right now, thanks to Jeremy Cooper and his Review team! So I would give close consideration to all their recommendations … while never letting attention to detail obscure the big picture. As part of an integrated package of measures to deliver income security in retirement and during working life, I would: Commit to raising the SGC to 15%
- Extend the current schedule to phase it in over a period of years
- Commit to introduce a “flexicurity” scheme, where a portion of the increased SGC would be paid as a premium for unemployment income insurance
- Abolish the $450 per month exemption for contributions
- Ensure that the Australian Tax Office enforces payment of SG contributions for all dependent contractors
- Establish a forensic review into the (mis)use of superannuation for tax avoidance and estate planning
- Have that review establish a more equitable distribution of superannuation tax concessions by income level
- Fix it all up
Editors Note: Well – that's Grant's view. Tell us if you agree and if not, why? Send your responses to super@actu.org.au.
Grant Belchamber profiled
Grant Belchamber’s first job when he started work at the ACTU in March 1986 was as part of the research team preparing and presenting submissions to the National Wage Case in the AIRC, for an award superannuation entitlement equal to 3% of wages.
The AIRC decision provided that entitlement - the first for ordinary Australian workers - to be paid into an approved super fund, where agreement was reached between unions and employers. In 1987 the AIRC began arbitrating the 3% entitlement; and over the past 20 years this big thing has grown. Grant is still a member of the research team at ACTU. He was appointed by the ACTU to the Board of Telstra Super in 2005.
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