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