Sydney, 9 May, 2006: The Australian Bankers’ Association (ABA) welcomes the Federal Treasurer’s announcement in tonight’s Budget that the Government plans to simplify and streamline superannuation.

The ABA has noted in many submissions to Government and parliamentary committees that the Australian superannuation system is too complex and there are not enough incentives to encourage Australians to save for their retirement.

David Bell, Chief Executive of the ABA, said: “Some of these proposals are important not just for older Australians, but also to encourage younger Australians to invest more in super. This is important because a retirement savings gap still exists between the aspirations and expectations of Australians for their standard of living in retirement and what the current system will deliver.”
“In particular, we are pleased to see that the Government is proposing to abolish reasonable benefits limits and age-based limits to be replaced by a lifetime cumulative limit.”

“Other proposals will also assist in the transition to retirement, such as flexibility in how and when superannuation can be drawn down.”

“The ABA also supports proposals to increase retirement incomes such as exempting Australians aged sixty or over from any tax on their superannuation benefits where these are paid from a taxed superannuation fund.”

The ABA will be examining the plan in more detail over the coming weeks on the basis that we support the right mix of policy to promote higher levels of superannuation and private savings.

Mr Bell added: “The banking sector believes that supporting the retirement income system by encouraging greater superannuation contributions and private savings will improve standards of living in retirement, as well as, address fiscal pressure concerns associated with Australia’s ageing population.”

The ABA looks forward to consulting with the Federal Government on its superannuation plan aimed at streamlining the contribution and payment rules.