David Murray has delivered his Financial Systems Inquiry (FSI) report.
Despite a push for lower superannuation fees, this hasn’t occurred and the reason for this is attributed to limited competition between super funds. The differential between fees is as much as 1.36 per cent. A formal process to allocate MySuper as the default fund for those not nominating a particular fund is recommended. Currently, if workers fail to nominate MySuper, their employers can choose a different fund. A Productivity Commission into whether a further inquiry into whether further changes are required to MySuper to lower fees should be held by 2020.
The FSI report also recommends that super funds should have a majority of independent directors.
It is also advocated that superannuation should be paid as a regular retirement income rather than a lump sum, although the option to receive a lump sum should remain.
According to the report, self managed super funds should also be stopped from borrowing money to buy shares and property, which would essentially make negative gearing impossible.
Australia’s tax system comes under scrutiny again, with a recommendation that the Government needs to review the differential tax treatments on deposits and fixed income investments, negative gearing and capital gains tax, franking and interest withholding tax.
To help fight identity theft and money laundering, a package of innovation recommendations includes enabling financial service companies to establish robust digital identities for their customers.
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