The Australian Labor Party’s (ALP) plan to simplify the superannuation system has largely been welcomed by the financial services sector. The proposed reduction to the controversial contributions tax to 13% is a big winner for the ALP.

Shadow Treasurer Mark Latham and Shadow Minister for Retirement Incomes Senator Nick Sherry outlined the new policy at an Association of Superannuation Funds of Australia conference in Brisbane.

Richard Gilbert, CEO of the Investment and Financial Services Association, says he’s particularly impressed with Labor’s proposed contributions tax cuts. “We further welcome Labor’s support for the concept of choice and remain hopeful that the major parties can come to the table and negotiate a choice regime for the benefit of all Australians,” he said.

Currently there are 25 million super accounts for 9 million fund members, and 4.6 million “lost” accounts containing $7.3 billion. One in three Australians has a “lost” account.

Mr Gilbert says Labor’s stronger focus on consumer education is also welcome, because there’s an increasing demand on Australian consumers to clarify terms and jargon used throughout the financial services sector. 

Some of the policy highlights to simplify super include: the automatic consolidation of superannuation accounts; standardised reporting formats; investment choices offered to all members; safe choice of funds with appropriate consumer safeguards; and an end to discrimination against same-sex couples.

The Financial Planning Association has challenged the ALP to support the Government and pass the choice legislation before Christmas. Acting CEO June Smith says the legislation has been delayed for seven years and should be implemented as soon as possible. “It is crucial that we all have the opportunity to determine where our retirement savings will be invested.”