The interim report from the Financial System Inquiry (FSI) recognises that superannuation is playing an increasingly important role in Australia’s financial system, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA CEO Ms Pauline Vamos says the growth in assets means superannuation is now a cornerstone of the Australian financial system.
“Whereas the Wallis Report said very little about superannuation, the report released by the FSI committee today recognises that superannuation has become a critical part of our economy. Superannuation does not just hold the key to future financial freedom for Australians, as a pool of assets, it also helps stabilise financial markets in times of unrest.
“The diverse range of assets in which superannuation funds invest, for example bank deposits, equities, property or infrastructure, also make a positive contribution to the Australian economy,” says Ms Vamos.
The report also recognises that ensuring policy stability is critical in order for Australians to have confidence in the superannuation system.
“Changes to superannuation policy create uncertainty for individuals planning their retirement. Therefore, any adjustments made need to consider the impact this will have on consumer confidence in the superannuation system.
Ms Vamos says the interim report’s focus on post-retirement should be applauded, as stronger policies in this space will be critical to ensuring dignity in retirement for all Australians.
“The report recognises the importance of developing policies that consider the ‘drawdown’ or retirement phase, as well as the accumulation phase of superannuation. Taking a ‘whole-of- life’ approach to superannuation policy will help ensure that these phases are managed in a way that delivers the best outcomes for the Australian community. In particular, policies that help reduce the complexity of decisions Australians face when they retire should be encouraged.
“The ability of the superannuation industry, and financial markets more generally, to develop retirement products that protect and provide for retirees thoughout the whole of their life is a key factor to ensuring they are financially provided for in their post-work years.
“Removing the various impediments that hinder this product development will help encourage innovation in the post-retirement income stream market, and help deliver a more flexible range of products to suit a variety of retirees’ needs.”
The interim report raises a number of other important issues regarding the superannuation system and its broader integration with the financial system and the economy. ASFA will provide a comprehensive response to the FSI committee.
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