Group aims to revive job super

By BRIAN FALLOW

Workplace superannuation schemes have been falling out of favour in recent years, but a group that spans employers, unions and the savings industry is looking to reverse that trend.

The group, formed four months ago and chaired by Retirement Commissioner Colin Blair, is the brainchild of the managing director of Axa Corporate Superannuation Services, Greg Fortuin.

It includes representatives of the Employers Federation, the Council of Trade Unions, the Investment Savings and Insurance Association and the Association of Superannuation Funds.

Mr Fortuin said the group was united in the common-sense view that if you wanted to increase private saving for retirement, a good place to start was upstream from the pay packet.

"It is easier if the money is deducted at source than to ask for it afterwards."

Currently, only 17 per cent of employees belong to employer-sponsored or other workplace or occupational superannuation schemes, largely because of compliance costs and tax anomalies.

Mr Fortuin said a big compliance cost was the requirement to have a prospectus, as well as the simpler investment policy statement, although it was rare for people to ask to see a prospectus.

The group had put up a paper to Finance Minister Michael Cullen urging relief in that area. It had also briefed other political parties.

The group was still working through the tax issues, said Mr Fortuin, but the aim was to find an equitable and fair solution that avoided onerous obligations and compliance costs.

One issue, usually labelled "Tolis," is that earnings on superannuation savings while in the hands of a fund manager are taxed at 33c in the dollar, even if the person whose savings they are has a lower marginal tax rate.

Employer contributions are also taxed at 33c, even though other fringe benefits are taxed at the appropriate rate for the employee.

A more fundamental change under consideration is for a regime that taxes earnings on savings, including capital gains, while they are in the hands of a fund manager, but exempts the final payout.

Dr Cullen has shown interest in setting alongside that an alternative regime that exempts the earnings on savings in the hands of fund managers, provided they are locked in for a minimum period, but then taxes them on the way out.

"We know that eventually we will have to face some issues we don't at present agree on, like whether the state pension should be means-tested or everyone should get it," Mr Fortuin said.

"But at this stage we have decided to go for things we could stay united on and to build trust among the group."