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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