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Financial System Inquiry Interim Report: Prepare now for future challenges

FINANCIAL SYSTEM INQUIRY

COMMENTS ON INTERIM REPORT BY DR MCCONAGHY

The interim report of the Inquiry which is chaired by David Murray was released on 15 July 2014.

There are below some direct extracts from the Interim Report. The first extract has mentioned the growth in money

in superannuation funds and the high costs associated with superannuation. We believe that our firm can assist in

keeping these costs under control and leaving our clients still in control of their own SMSF; making the decisions

necessary for their own retirement.

":Despite this growth, the FSI observed that superannuation fees remain high, due in part to the Australian

superannuation sector having the highest operating costs of any member countries of the OECD.”

We have never been enthusiastic about borrowing within a superannuation fund structure. Our lack of

enthusiasm may be justified, based on the extract below.

 “The FSI has also questioned the borrowing permission of superannuation funds saying that, the growth

in self-managed superannuation funds has advanced the historically limited practice and opened the

 superannuation system to new vulnerabilities. Though the Report stopped short of suggesting a

prohibition on borrowing, it seems that the FSI may be considering this as a possibility.”

Moving from accumulation phase to pension or part pension phase within a superannuation fund is not

difficult but you do need to prepare proper paperwork. The inevitability of death or the lack of investment

capability has to be part of the planning process. There must be a succession path in place.

“Report suggested that the retirement phase of superannuation remains underdeveloped and does

not meet the risk management needs of many retirees. Though there are regulatory and other

policy impediments to developing income products that benefit retirees, this remains a key area

for improvement.”

Comments written by DR McConaghy on 24 July 2014

 

For more information please click on the link below:

http://www.claytonutz.com/publications/edition/24_july_2014/20140724/financial_system_inquiry_interim_report_prepare_now_for_future_challenges.page

 

 

 

This article is not a substitute for independent professional advice. We do not warrant the accuracy, completeness or adequacy of the information or material in this article. All information is subject to change without notice. We and each party providing material displayed in this article disclaim liability to all persons or organisations in relation to any action(s) taken on the basis of currency or accuracy of the information or material, or any loss or damage suffered in connection with that information or material. You should make your own enquiries before entering into any transaction on the basis of the information or material in this article. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation.

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