Michael Lorimer

Self-managed Independent Superannuation Funds Association (SISFA) has redesigned and is relaunching its membership offering for SMSF trustees. Through existing communication channels and those of new associated partners and sponsors of the Association, up to 200,000 SMSF trustees can be contacted quickly with this membership offer.

“Alongside its advocacy efforts, for some time now SISFA’s focus has been to build a network of likeminded professionals in the SMSF sector to stay informed of technical and policy issues and provide a forum for the exchange of ideas. While this has been successful, it has become noticeable that the needs of 1.1 million SMSF members extend beyond supporting the professionals on whom they rely for advice and expertise.

“SISFA has long debated how to better support these individuals who are essentially ‘running their own money’ (with or without a professional adviser) and often do not have all the knowhow to protect their nest eggs. The financial services sector has taken them for granted and often only taken their own industry agendas to regulators. They have not ignored trustees but rather thought that their agenda would also cover the needs of trustees without involving them in the discussion,” said Michael Lorimer, Managing Director of SISFA.

SISFA believes that ordinary SMSF members need a louder voice in Canberra and greater support from the industry. To this end, they will be offering SMSF members a new annual membership rate of $48 plus GST which will allow them access to a range of services and benefits, including:

• Educational content
• Access to experienced practitioners
• Enhancing SISFA’s advocacy efforts for members in Canberra
• Investment opportunities suitable for SMSFs
• National seminars/webinars provided by SISFA and its Partners
• Newsletters

The introduction of new service providers and offerings to SISFA trustees will correct the imbalance where investment opportunities were only available to large super funds. The SMSF sector is the largest superannuation asset base and deserves access to superannuation investment options.

SISFA has a national reach and is well placed to expand into providing services and a support base for the largest pool of investors in the country.

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Prof Deborah Ralston

The recently formed Alliance for a Fairer Retirement System highlights the risks facing thousands of small business owners from Labor’s proposal to disallow cash franking credit refunds. Earlier this week, Alliance representatives met with the Shadow Treasurer and Shadow Minister for Small Business, Chris Bowen, and with CEO of the Council of Small Business Australia (COSBOA), Peter Strong, to discuss the issue.

“Many small business owners may be unaware of the impact of Labor’s proposal on their retirement plans. Those who have invested equity in their company and rely on dividends to fund their retirement may be surprised to find a significant fall in income”, explained Professor Deborah Ralston, spokesperson for the Alliance.

The Alliance has launched a website to cater to the growing demand from organisations and individuals who are seeking support, information and research to better understand the impact of the proposal.

The new website www.fairerretirement.com.au provides information, and relevant news for small business, investors and retirees. It also provides an opportunity for individuals to lodge their personal stories concerning potential outcomes if the proposed policy goes ahead.

Announcing the launch of the Alliance website in Brisbane today is a team from the Alliance including spokesperson, Professor Deborah Ralston, Ian Henschke, Chief Advocate for National Seniors Australia, John Maroney, Chief Executive Officer of the Self Managed Superfund (SMSF) Association, Alan Marshall, President, Association of Independent Retirees and Michael Lorimer, Managing Director of SISFA.

he launch of the website comes off the back of growing scrutiny about Labor’s proposal, including Treasury’s recent analysis that casts doubt about the likely revenue generated. This recent coverage is just another thread in the growing fabric of discontent by everyday Australians who stand to be adversely impacted by the proposal.

A case study on the website highlights the plight of a Queensland small business owner, Arthur Smith who after years of building his small business, will commence his retirement in the near future. In this case the proposed policy would lead to a loss of one-third of his retirement income, previously comprised of dividends and franking credits. He notes that he and his wife, as self-funding retirees, “see (the removal of cash refunds) as an attempt to “steal” from us in order to fund a whole range of policies that we don’t necessarily agree with”, impacting his ability to enjoy the retirement he and his wife expected.

The Alliance was formed last month to explore options to fix problems with the existing superannuation taxation, Age Pension means testing and broader retirement income systems. In addition to the six original members, three more national associations have recently joined the Alliance:

• Association of Independent Retirees
• Australian Investors Association
• Association of Financial Advisers

Well known personal finance author, Noel Whittaker, will deliver a short presentation during the launch highlighting some of the key issues of concern to the Alliance.

The organisations that form the Alliance include:

• Australian Shareholders’ Association
• Australian Listed Investment Companies Association
• National Seniors Australia
• SMSF Association
• Self-managed Independent Superannuation Funds Association
• Stockbrokers & Financial Advisers Association
• Association of Independent Retirees
• Australian Investors Association
• Association of Financial Advisers

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Prof Deborah Ralston

Several associations have formed the “Alliance for a Fairer Retirement System” to explore options to fix problems with the existing superannuation taxation, Age Pension means testing and broader retirement income systems. The formation of the Alliance is in response to Labor’s proposal to disallow refunds of excess franking credits for a range of retirees and shareholders.

The Australian Shareholders’ Association, Australian Listed Investment Companies Association, National Seniors Australia, SMSF Association, Self-managed Independent Superannuation Funds Association and Stockbrokers & Financial Advisers Association have formed the Alliance to work together on this important issue. We expect more groups to join the Alliance shortly.

These associations represent millions of senior Australians, shareholders, self-funded retirees and those planning a sustainable retirement, including over one million members of self-managed super funds.

The spokesperson for the Alliance, Professor Deborah Ralston, said: “I am very pleased that the Alliance has been formed as it will contribute substantially to the debate on improving retirement outcomes for millions of Australians.

“We need more evidence-based research and policy development and increased bipartisan support to complete the development of Australia’s retirement income system. Once that development has been completed, there needs to be a period of ongoing stability for the system so that Australians can plan for their retirement with confidence.”

“Providing for retirement requires trust that the system won’t change,” said Judith Fox, the CEO of the Australian Shareholders’ Association. “Having a self-funded retirement income requires long-term planning and stability. Ad hoc policy changes erode trust and don’t meet the need for a sustainable retirement savings plan. We need policy that looks at the superannuation and tax systems comprehensively rather than cherry picking elements to raise revenue.”

“National Seniors’ charter is to improve the lives of all older Australians,” said Ian Henschke, National Seniors Australia Chief Advocate. “Let’s hope this issue triggers a broader debate on systemic tax reform to fund sustainable, fair, private and public pensions. We’ll be working hard for that outcome.”

The CEO of the SMSF Association, John Maroney, welcomed the creation of the Alliance and stressed the need for clear communication on key issues. “Let’s talk about ‘company paid tax credits’ rather than ‘franking credits’ because that’s what the issue is. Companies have already paid tax on behalf of their shareholders; hence it is appropriate for those tax credits to be available for all shareholders.”

Michael Lorimer, Managing Director, Self-Managed Independent Superannuation Funds Association (SISFA), added “The consequences of this proposed policy will hurt real people who are not wealthy. Just because you have a SMSF or small APRA fund does not mean you are “wealthy”. Labor’s proposed policy will change investment behaviour which may drive more people onto reliance on the Age Pension. The announced carve-outs are arbitrary and mean there may be more complexity and unfair consequences will ensue.”
The Alliance is considering a report prepared by Michael Rice, CEO of Rice Warner, on the implications of Labor’s proposed policy on franking credits. That report clearly exposes many of the poor design features of the policy and the unlikelihood that the projected revenues will eventuate if the policy was implemented. The Alliance will commission and encourage further research and policy discussion on these topics and intends to convene a summit later this year on retirement system design.

“Labor’s proposal will cause a distortion of the market and give an unfair advantage to large taxpaying superannuation funds at the expense of everyday Australians who have worked hard, paid their taxes and carefully saved for their retirement through their SMSF or small APRA fund,” said Andrew Green, CEO of the Stockbrokers & Financial Advisers Association.

The Alliance calls on all political parties to carefully consider issues related to superannuation taxation and retirement design and to ensure that policy development is undertaken on a holistic basis and not via ad hoc steps in response to short-term revenue objectives or political objectives that could undermine confidence in the retirement system. Other associations who share these concerns are invited to join the Alliance.

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“If this goes ahead, it’s clearly a disaster and really is just the surcharge reincarnated. Although it is proposed to only apply to high income earners, the reality is that the costs of administering such a system will be borne by all super fund members, regardless of their balance or income.  The damage done to the perception of superannuation by such a measure is much higher than the tax actually collected. 

“Will it only be a matter of time before people earning less than $300,000 pa will also have a higher contributions tax? 

“This Government and future governments have to get over seeing superannuation and voluntary contributions as some cash cow that can be raided when other revenue channels are reduced. People have to believe that super is worthwhile and have confidence in the system. 

“And, on top of new rules, we are still awaiting a final announcement on the structure for over-50’s contributions from 1 July 2012,” said Michael Lorimer, Chair of SISFA.

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“It is a practical outcome for trustees and allows for greater flexibility in buying property where the opportunity to add value can enhance the retirement outcome for fund members.

“I have found that many trustees wanting a residential investment have had to primarily consider new, ‘off the plan’ residential developments where the need for improvements was not an issue. This practical change will allow for consideration of older properties that can be sensibly upgraded,” said Michael Lorimer, Chair of SISFA.

Industry concerns that trustees might overcapitalise properties under the new rules is not seen as a major issue or borne out by recent investment history.

“When SMSFs started to grow in numbers and the first round of SMSF lending was allowed, we heard howls that trustees would go broke and lose money because they weren’t in proper managed funds. That has simply not been the case and we have seen in ATO figures that SMSF portfolios are similar to standard balanced portfolios. They have not become over geared property portfolios and we can’t see that this practical change in treating property investments will cause any mayhem,” said Mr Lorimer.

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