Financial Services Council calls for a post-COVID-19 super boost

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The federal government should help superannuation fund members rebuild their nest eggs if they were forced to raid them to survive the COVID-19 crisis, says the Financial Services Council (FSC).

The peak body has called on the government to introduce a new co-contribution scheme and one-off concessional cap to help superannuation fund members shore up their retirement savings if they took advantage of the COVID-19 early access scheme.

In its new report, Accelerating Australia’s Economic Recovery, the council also outlines how the financial services sector can contribute to post-pandemic economic recovery.

The council says reforms and tweaks to funds management, financial products and advice, life insurance, tax reform and superannuation could all help with economic rehabilitation.

“The COVID-19 pandemic has impacted savings across the sector, with the industry-wide rate of return for the March quarter being -10.3 per cent and for the year being -3.3 per cent,” said the report.

The FSC believes those close to retirement who needed to access their super will be the most disadvantaged.

“Market volatility has disproportionately impacted Australians close to retirement and those who have accessed their savings early to alleviate hardship,” it noted.

A co-contribution scheme where the government would contribute $1 for every $5 a member contributes up to a maximum of $10,000 would fund members who used the early release scheme and would need to replace that money, says the council.

It also suggested people aged over 50 could be given a one-off higher superannuation cap of $50,000 that could also be carried forward if unused.

FSC chief executive Sally Loane suggested that the financial services sector could play a big roles in the economic recovery process and provided new policy ideas and solutions to existing problems within the sector.

Among these solutions was a proposed development of Australian superannuation and infrastructure investment vehicles (ASIIV) which would seek investments from retail super fund members and SMSFs, says SMS Magazine.

ASIIVs would “democratise investment in critical domestic infrastructure development”, said the council, with investment opportunities in new and existing infrastructure assets to be made available to anyone with money in super.

“The ASIIVs will unlock a large chunk of funds – around $1.7 trillion in choice and self-managed superannuation funds – for infrastructure projects from investors who today have limited access to them,” said Ms Loane.

“The FSC and its members want to help drive Australia’s long-term economic recovery. By implementing the reforms raised in this report, the national cabinet and commonwealth government can get the best bang for the nation’s buck and get Australia back up on its feet.”

Are you opposed to your super being used to invest in recovering businesses and industries? Is this preferable to being taxed to help re-invigorate the economy?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?

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8 Comments

Total Comments: 8
  1. 0
    0

    How does this help retirees who have no way of replacing lost super during the pandemic?

    • 0
      0

      A lot of people took out the $10,000 when they didn’t need to. The government shouldn’t help them replace it. If they help anyone it should be those close to retirement whose balances have dropped through no fault of their own. But the Liberals have always tried to destroy the super scheme. They won’t do anything to help it.

  2. 0
    0

    Just leave OUR super alone.

  3. 0
    0

    There are good reasons for limiting the way super funds are invested and I don’t agree with changing those rules. I also don’t agree with asking government to pay out even more money than they have already committed because of the pandemic which has placed Australia in a Recession. It’s not government money, it’s taxpayers’ money.

  4. 0
    0

    If you are over 65, the only way you can contribute to your super is if you qualify for the Work Bonus. This is highly discriminatory, penalising those who cannot work.
    On one hand, the Govt wants people to save for their retirement, but on the other hand, brings in rules and regulations that impede you to do that.
    Obvious criteria needs to be followed, but surely if an aged pensioner has assets & income under the cut off threshold, they should be able to contribute to their super, regardless of whether they work or not. I am single, on the full pension, own my own home, and no longer able to work. Have around $70,000 in super, draw the minimum back (2.5% for this and next financial year). If I have some spare dollars sitting around, I would like to be able to contribute this to my super, but can’t. If I was working, I could. Why the difference? A friend in a similar situation recently won $10,000 in a competition – she would love to add to her super but can only put it in the bank.
    I am quite happy to add to my super – I should be able to.

    • 0
      0

      Your friend could also buy shares with her windfall. There are some good bargains now and over time share will increase in value. Afterall, super is based on share too!

    • 0
      0

      There are cheap index funds which can track the same “balance” as any super fund and are much cheaper than superannuation funds. If you want to be invested in shares, bonds or TEITs they are available and tax free until the earnings get to around $35 000 a year for a single person and $58 000 a year for a couple. A much cheaper and more flexible way to invest in markets than the superannuation vehicle.

  5. 0
    0

    Umm… Can someone please explain WHY I as a taxpayer, should now pay more for those who withdrew funds from super.

    FGS! I, and others like me, already fund all other welfare through Centrelink payments including the jobless and pensions of all types. Why should I now have to pay even more for those who squandered their super and will no doubt go again in July?

    When are people going to be made responsible for their own decisions and actions and stop expecting to be bailed out at every turn? If they took out super it is their responsibility to either repay it through making extra payments or live with the consequences of not doing so. It is not my responsibility to make up their losses.

    Who will make up the losses for those people whose super dropped as a result of the COVID-19 actions?


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