- SMSF Association Media Release
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services will place ongoing scrutiny on the financial advice industry, Jordan George, SMSF Association, Head of Policy, told its National Conference today.
He said that although the SMSF sector had been “specifically excluded” from the terms of reference, the Association would keep a careful eye on proceedings.
“Royal commissions have a habit of going where they are not expected to, and as such it’s imperative we remain vigilant throughout the course of an inquiry that has the potential to have a lasting impact on the financial advice industry.”
George told the delegates that the integration of the social security and superannuation was a priority issue for the Association in 2018 and beyond.
“It’s important that Government get the settings right to ensure the proper incentives are in place to encourage people to save for retirement.
“As we have seen for home-owning couples with between $500,000 and $800,000 in superannuation are potentially no better off in terms of initial retirement income under the current Age Pension settings than couples with smaller superannuation balances.
“This potential pitfall has come about because the lack of integration of superannuation and the Age Pension – the two key pillars of retirement savings in Australia.”
George also expanded on the broader issues facing the industry in the future, including an ageing SMSF population and asset allocation.
“With around 40 per cent trustees currently aged between 55 and 70, over the next 10 to 15 years dealing with issues of declining cognitive ability and SMSF exit strategies will be imperative for the SMSF sector to continue delivering the right outcomes for trustees.
“To ensure that trustees begin planning for these issues the Association has supported the Australian Law Reform Commission’s recommendations on preventing elder abuse.”
On asset allocation, he said it was essential that product development ensured that trustees in either the transition to retirement or pension phases had access to assets that ensured income and capital security.
“As the past several years of low interest rates have highlighted, having an asset allocation that provides income and capital security is imperative.”