Super in Australia ‘unfair and complex’
Zurich has questioned the complexity of Australia’s superannuation rules following last year’s Better Super reforms.
In a white paper titled Death and taxes are certain – super still confounds, Zurich says much of the complexity is not only causing difficulties in retirement and estate planning but also unfairness.
The report describes tax on super death benefits as a “major source of unfairness” and says the problem with super is if people don’t fit into certain types of beneficiary groups then a death benefit can only be paid to them via the member’s estate.
The author of the white paper, Zurich Technical Services Manager Dimitri Diamantes, told insuranceNEWS.com.au the unfairness lies in the treatment of non-dependants who are subject to taxation and are unable to start an income stream from their dead parent’s super benefits.
“By contrast, a financial dependant who is not an adult child of the member could start the pension and keep it going indefinitely,” he said.
Mr Diamantes says while Better Super simplified many aspects of super, complexity has remained from the old regime.
He believes lump sum super death benefits should be payable directly to any type of beneficiary and be tax-free. Adult children should also be able to receive super from a deceased parent as an income stream, and anti-detriment payments should be limited to compensating for the effect of tax on super contributions.
In a white paper titled Death and taxes are certain – super still confounds, Zurich says much of the complexity is not only causing difficulties in retirement and estate planning but also unfairness.
The report describes tax on super death benefits as a “major source of unfairness” and says the problem with super is if people don’t fit into certain types of beneficiary groups then a death benefit can only be paid to them via the member’s estate.
The author of the white paper, Zurich Technical Services Manager Dimitri Diamantes, told insuranceNEWS.com.au the unfairness lies in the treatment of non-dependants who are subject to taxation and are unable to start an income stream from their dead parent’s super benefits.
“By contrast, a financial dependant who is not an adult child of the member could start the pension and keep it going indefinitely,” he said.
Mr Diamantes says while Better Super simplified many aspects of super, complexity has remained from the old regime.
He believes lump sum super death benefits should be payable directly to any type of beneficiary and be tax-free. Adult children should also be able to receive super from a deceased parent as an income stream, and anti-detriment payments should be limited to compensating for the effect of tax on super contributions.