Major bank chief says superannuation needs to be fixed now

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The head of Westpac’s wealth management division, Brad Cooper, has urged the Government to make sorting out Australia’s retirement income system a top priority, saying it’s now “a burning platform”.

Mr Cooper believes the new Parliament should agree on tightening superannuation tax concessions for the wealthy. He says that the Government’s slim majority, coupled with the uncertainty of the Senate, is creating ambiguity about the future of Australia’s retirement income system and potentially harming superannuation in a time of global economic volatility.

According to Mr Cooper, our ageing population is also a cause for urgent action.

“We have to stop the politics; we need [parliamentarians] getting on with the job. We need good policy and clarity around decisions being made,” he told The Australian Financial Review.

Mr Cooper feels that the “first order of business” should be for Kelly O’Dwyer to define the purpose of superannuation and enshrine it in legislation, in accordance with recommendations from the Financial Systems Inquiry (FSI). Something along the lines of “creating an income stream to replace or supplement the Age Pension”.

From there, he believes the Government can push through its policy to impose the $1.6 million cap on total super held in accounts, as well as the lifetime cap of $500,000 for non-concessional contributions.

He says that Labor’s superannuation policy is essentially the same as the Coalition’s, so the policy should pass.

“You can argue the toss about elements of [superannuation policy], but from a policy perspective, it is close. Most Australians would look at that and say that is fair enough, there needs to be some sort of cap on when you should stop expecting a tax concession in order to save,” said Mr Cooper.

The wealth management chief says it is imperative that this superannuation package be passed so the Government can focus on creating policy that will help low- to middle-income earners, indigenous Australians and women returning to the workplace.

“That is a burning platform right now,” Mr Cooper said. “You need people not only living a dignified life in retirement but one that allows them to participate economically. That requires this Parliament right now to sit down and say what are the policy decisions we have to have?”

Mr Cooper claims that Government policy should focus on helping people become self-sufficient and not reliant on the Age Pension, but this indecision and stalling is making it difficult for people to make voluntary contributions to super.

“You need to stop the tinkering so Australians have trust in the system. Then they can put voluntary contributions in – that is the whole purpose of the cap. But at the moment, with all this ambiguity, why would someone voluntarily put more money in?” he said.

Mr Cooper also welcomes a higher level of scrutiny on our retirement income system to ensure efficiency and healthy competition within the superannuation industry.

“I think that is a critical review, so long as it is independent and looks at the health and sustainability of the system, standing back from industry funds and banks and asking is it stable and allocating money appropriately, is it working?”

He claims that banks are working to better understand the needs of their customers, but the Government has to do its bit to ensure a trustworthy, sustainable future for superannuation and retirement income.

“If banks do a great job and the policy settings are not right, it isn’t going to work,” he said.

Do you think that the Government’s top priority should be sorting out our retirement income system? Why should this be a priority?

Read more at The Australian Financial Review

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Written by Leon Della Bosca

47 Comments

Total Comments: 47
  1. 0
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    Westpac Wealth Management – using your Super money – to increase their shareholder’s wealth.

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      Reasons, it could be argued that if your Super is being managed by a major bank, you will probably have shares in that bank. In most cases this is something that you can control through your investment profile. At least that is how my Super works, I guess I can’t speak to other Super Schemes.

  2. 0
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    No I do not think so ….. they are more worry about keepimg their jobs and not to look after us
    They are just a seat warmers waiting for their big pension
    Our kids will have a miserable retirement if this uncertanty continues.
    Where is our Bill of Rights to support us and defend us from this uncertant future ?????

  3. 0
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    “If banks do a great job”. Certainly banks are doing a great job of filling their shareholders’ pockets. But not doing a great job for their customers. All banks are ripping off their customers.

  4. 0
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    Ouch. This is a mixed message. “Yes, we want to protect your income stream but if we can force politicians to put a $1.6m cap then any excess will come to us ‘THE BANK’.” However, young Mr Cooper we, the just retired, have been tricked. We put your money in a private superfund decades ago thinking it would secure our future not be to be a wishing-well for the government. People your age, Mr Cooper, will be seeing this and pulling the money out of the financial bureaucracies as fast as possible. They won’t be paying for financial advice and they won’t be putting their excess in retirement investment portfolios established for the benefit of hedge funds.
    That $1.6m will be inflated to being a token super portfolio in 10 years. Of course if you are lucky enough to married I would imagine it goes up to $3.2m. I am sure that’s lovely for the marrieds.
    Mr Cooper and Mr Turnbull, you have no idea of our financial commitments and family responsibilities. You asked us to manage our money according to the current concessions and laws. I worked out several years ago that the super funds were ripping us off and the only benefit for remaining in the fund was the tax concession.
    If I pull my money out of super it won’t be going into the banking system.

  5. 0
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    The lifetime cap is interesting. If the super funds lose money as they did in 2008/09 then it will be impossible to make up the loss if necessary. This will really stuff the plans of many people. What we really need are a similar mutual life insurance package as in the USA and Europe where life policies can be used to build lifetime income through borrowing against the policy payout. We had these in Australia years ago but the corrupt insurance and banking companies colluded to delete the policies reverting to only offering whole of life insurance. Independent mutual insurance companies were trheatening to compete with the mainstream insurance and banking industry players and their loss meant that Australians were cheated of their ability to operate their own banks.

  6. 0
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    Australia – the country with the oldest qualifying age for the pension in the WORLD!

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      Israel Norway, Iceland, Norway all 67, most others are 65.
      Germany moving to increase the age to 69.
      Australia will have a pension age of 70 for those born after 1965.

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      You can retire anytime you like but you will not be able to access the age pension until 70. So leave work at 60 have a great 10 years crossing of your bucket list and then you will be really to get the pension.

  7. 0
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    Cooper, Turnbull, and Glenn Stevens – all living in an insular world with FA of an idea how old people are battling. This is just more lip service and no follow-up action. This guy would make a good politician.

  8. 0
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    I agree with the need to define what super is actually for. If it is to replace all or part of an age pension then make that decision and let everybody know as there are too many different opinions now. I believe there is a need to also define how super may be accessed. Defining the purpose will also clear up all those grey areas where super can be used prior to retirement. Whether we agree or not, all of us are living longer than ever before and more and more taxpayers will be needed to provide funds to pay retirees on pensions. It seems logical that provision should be made to make the super system introduced by Keating to supplement the age pension and take the pressure off successive governments having to find funding for pensions. As more and more funds are needed to pay pensions, less and less funds will be available to pay for essential services such as health and education.

  9. 0
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    Why don’t we have a pension system similar to other countries where you are rewarded for your contributions….. Meaning if you worked and retired then you get a pension of 75% of your average three years. If you never worked then you’re only entitled to the basic pension. The system now doesn’t encourage people to work. A bum gets the same pension as someone who worked, paid taxes and contributed to society.

    • 0
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      Yes, it’s really fair, isn’t it?

    • 0
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      Totally agree!

    • 0
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      So if woman stayed home to look after her kids instead of farming them off to childcare she misses out. Doesn’t sound very fair to me.

    • 0
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      Good point OG, but I would assume she would be part of a couples payment and would share in the tax paid by her husband. Not ideal but when do we ever see a perfect solution to any problem?
      But one would have to ask, how long does a woman have to stay home with the children, once at school they require no parent input for nearly seven hours of the day. Given that we are supposed to have a flexible workforce, this gives an opportunity for women to engage in the workforce for a good part of their productive working time.

    • 0
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      If you had 3 or 4 children 6 years apart you could be out of the workforce for quite some time while they were all little.

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      OG, point taken but a family with more than two children is quite unusual these days.

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      I know a woman aged 60 who had eight. Most of my cousins are between 50 and 65 and all had 4 or 5. My son has 4. But I guess we can work on assumptions and averages and stuff anyone who doesn’t conform. That seems to be a common approach these days. Why don’t we just put everyone in a grey uniform and teach them the Nazi salute?

  10. 0
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    If super should be defined then so should the age pension and settle once and for all the argument of welfare vs entitlement.

    Stop punishing those who worked, scrimped and saved for their retirement and home ownership and rewarding those that didn’t and now think they are owed by those that did.

    And if there is to be a state paid pension then it should be at a level that covers basic life needs, shelter, food, utilities and clothing. It should NOT cover holidays, meals out, trips to the theatre and other lifestyle choices. And get rid of the disparity between those that own their own home and those that don’t. Downsizing should be a part of that, – removing stamp duty for downsizers perhaps (getting rid of the asset rich cash poor syndrome) but once done, people who own their own homes still have bills to pay that renters don’t (think rates, water, strata fees, maintenance none of which renters have to pay) so why the lower pension for homeowners?.

    • 0
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      Down sizing doesn’t necessarily mean cheaper real estate. The apartment market is far more expensive than the house and garden. The cost of moving i.e. stamp duty and GST is massive. Then you have to say goodbye to your infrastructure of family, friends, transport, medical care etc.
      The last time the idea of valuing assets was considered it caused many premature deaths due to stress and anxiety. Maybe if the opposite was considered – if you upsize and then want to government benefits.
      But this isn’t what this article is addressing. The Westpac bank is suggesting we need our already taxed dollars to be taxed again by preventing us from investing our money in super over $1.6m. Any excess money the bank expects will be theirs to invest and the governments to tax. What is wrong with this?
      Its not their money, inflation is going to make $1.6m a bare essential in 10 years and we invested in super on the concessions offered in good faith that this was the right thing to do.
      We had other ways we could have invested.

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      I do not agree that a pension should only cover basic needs. The vast majority of lower-paid workers had no opportunity to accrue superannuation and very little opportunity to save. They paid into a fund that was supposed to provide for them in old age. We owe them a comfortable standard of living – not a mere boring, harsh existence. And what about the cost of health care, disability aids, home help when it’s required? It’s disgusting to suggest people who slogged their guts out for this country for 5 decades should be condemned to a miserable old age.

      And how dare anyone whinge about tax on $1.6 million while condemning those who had far less opportunity to poverty? What a disgrace!

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