Red-flag warning on super
Published in Adelaide Advertiser, November 2009
By Karina Barrymore
Workers are likely to desert the voluntary superannuation system in droves, commentators say, as the industry braces for another round of rule changes.
Confidence in super already is stretched from years of tinkering, experts claim.
Comments this week by Federal Treasurer Wayne Swan flagged yet another shake-up, including taxing super at a higher rate for some savers.
Advisers said people were widely expected to stop voluntary contributions until the next round of changes is settled.
"When the Government starts making comments like this it impacts on the behaviour of a lot of people," superannuation lawyer Bryce Figot, from DBA Lawyers, said yesterday.
"It's only a bit over two years since the last major changes and now we have these rumblings of more changes.
"It makes people less willing to put money into super.
"I think most people will wait until the end of this financial year, until after the release of the Henry tax review, before making any more contributions," Mr Figot said.
Wealth Within founder Dale Gilham said the Government was preparing for another round of tinkering. "It diminishes confidence every time," he said yesterday.
"I can't tell you the amount of mums and dads who tell me they have no confidence in superannuation.
"One, they are very unhappy with the providers and their ability to deliver good returns and, two, governments appear to have this inability to stop fiddling.
"It means people have no certainty. Certainty is what they want. They want to know that if they put x amount of dollars into their super then they are going to be able to get that amount out at the other end.
"People are definitely pulling back on the amount they are putting in, absolutely.
"It makes sense. I'd rather have my money outside super where there are more options to invest than in super, where you can't get at it and you don't know what the rules will be when you finally can get at it," he said. "Do your normal compulsory contributions but sit and wait a little bit before putting in any extra."
Mr Swan flagged changes to the concessional tax rate on superannuation at a business conference on Thursday.
The Henry review is expected to report to the Government next month.