Retirement
Super is no ‘sacred cow’, minister warns
The superannuation industry should stop dragging its heels and comply with new government regulations, a government minister has warned.
Super is no ‘sacred cow’, minister warns
The superannuation industry should stop dragging its heels and comply with new government regulations, a government minister has warned.
The Morrison government recently announced measures to aid workers through the coronavirus outbreak by allowing individuals experiencing financial hardship to withdraw up to $10,000 from their super fund a year for the next two years.
The Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume, has put super funds who might be dragging their feet on the changes on notice, saying: “No part of society or the economy is a sacred cow. This includes the superannuation sector.”
In her speech, the Minister explained that while superannuation is for retirement, many Australians need the money today more so than they need it tomorrow.
“We believe that for those significantly financially affected by the coronavirus, accessing some of their superannuation today may outweigh the benefits of locking up those savings until retirement,” Ms Hume said.
“There is no doubt we will recover, but I think we all know that this country will never be the same again, and every industry in Australia will change after this. Superannuation will not be immune to this change.”
Ms Hume accused some super funds of “self-interest dressed in sanctimony” and said that some were claiming immunity from the changes on the basis of “a higher calling”.
“Often, those who seek to thwart collective efforts are doing so to hide individual failings,” Ms Hume said.
The Minister believes weaker investment funds will be found out during the crisis.
“If a fund has run a fairweather-only investment strategy, they will be exposed. There is a reason that diversification is important – it reduces risk. Risk isn’t just a financial concept, it’s a reality, and we’re living it.”
The changes have been met with resistance from the superannuation sector, with Australian Institute of Superannuation Trustees CEO Eva Scheerlinck saying accessing super now would only “crystallise losses”.
“The truth is that while advocating for accessing super at times of crisis might provide an opportunity for opponents of super to break down universal compulsory super, policymakers must do better than a short-term hit at the cost of long-term economic and public policy benefit,” Ms Scheerlinck said.
The Financial Planning Association of Australia (FPA) has urged Australians to seek financial advice before withdrawing cash from their super, telling Aussies to only use it as a last resort.
While the FPA supports this measure as an option for Australians who need it, CEO Dante De Gori CFP stressed that early access to retirement savings comes with strict conditions.
“Superannuation access should be used as a last resort. It is to be used to fund retirement and its primary purpose must be respected, even in these increasingly uncertain times,” he said.
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