Prepare for change, super industry told Retirement Competing interests
Australia's first superannuation minister Nick Sherry says the $1.6 trillion retirement savings sector needs to get "realistic" about the inevitability of changes to the rules on super.
Industry bodies have called for no changes to super for up to a decade and threatened an advertising campaign against potential adverse policies, but Mr Sherry said no government would quarantine the sector from reform.
"There will be constant change in the superannuation system," Mr Sherry, the former Labor assistant treasurer and minister for superannuation and corporate law, said.
"I think you've got to be a touch realistic. Everyone wants different things from the super system: there are lots of competing interests, there's lots of self-interest," he told a conference. "I don't think it matters who is in power, no government is going to say, 'We are going to put away superannuation and retirement funds policy and have no change for five to 10 years'."
Now a senior adviser at Citi and Ernst & Young, Mr Sherry also signalled a crackdown on lump-sum payments, matching the super access age with the pension age and trimming incentives for voluntary contributions as compulsory contribution levels rise.
"The last large area of reform that must be tackled . . . we have a lump sum superannuation system accessed at 60, we have a pension age of 65 increasing to 67 that is means-tested," Mr Sherry said.
"That is not sustainable. They'll have to put parameters around the lump sum and there'll have to be convergence between the access age and the age pension."
And he forecast continued debate on the sustainability and fairness of tax concessions for high-income earners, saying tax expenditures on super were increasing at a rate of 10 per cent a year.
After Treasury warned that the cost of tax concessions will jump to $45 billion by 2015-16, Labor announced minor changes to super rules in April.
"That issue will come back, rest assured, it's not going to go away," Mr Sherry said.
"It may not be dealt with in the first term of the new government but it'll certainly have to be dealt with in the second term. How it's dealt with, we'll see."
The super industry also recently criticised the Coalition for announcing plans to defer the increase in compulsory super contributions to 12 per cent by two years.
At the same CEDA conference, Michael Lorimer, chairman of the Small Independent Superannuation Funds Association, pointed to the political clout of Australia's self-managed super funds.
"Four hundred and eighty thousand [self-managed] funds translates into one million votes, so the political clout of this segment of the market is becoming more relevant," he said.