26 June 2016
I have been an ASIC-registered Financial Adviser for more than three decades. Over that time, I have provided my clients with retirement-planning advice. I have promoted the Government’s (both Liberal and Labor) carrot and stick message of (1), the increased long-term vulnerability of the aged-pension and, (2), tax concessions specifically structured to encourage self-funding superannuation retirement savings.
ASIC requires me to give my clients a Statement of Advice (“SoA”). It sets out the Government’s superannuation tax incentives. Those tax incentives underpin my SoA’s recommendations. They are crucial to the client’s decision. I am invariably asked “What happens if the Government changes things?”. UntiI now, I have always answered: “In my long-term experience, Governments have always ‘grandfathered-in’ protection for existing arrangements.”
But Treasurer Scott Morrison, in his May 2016 Budget, changed all that.
Last year, before that Budget, he said to the Australian people:
“The Government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future.
… unlike Labor, we are not coming after people’s superannuation…”
Not only did the Government not do what the Treasurer promised, they did precisely what the Treasurer promised that the Government would not do.
The Government came after people’s superannuation and announced proposed increased taxes on superannuation.
Furthermore, the Treasurer added insult to injury. He announced those increased taxes without also announcing that Australians who had acted in good faith and saved for their retirement under the then existing rules, would have their superannuation savings protected by grandfathering.
What am I supposed to tell my clients now, when they ask me, as they will, “What happens if the Government changes things?”
Am I now to say, “Well, I remember the Liberal Government’s May 2016 Budget. I wouldn’t put my savings into superannuation because you can’t trust the Government not to change the rules, and not protect your savings by grandfathering the existing rules”.
Authorised Financial Adviser Representative.
Save Our Super Disclosure:
The author of the above letter, Jim Brownlee, is a long-standing and close friend of Jack Hammond’s – the founder of Save Our Super. From 1965 to 1974 they were partners/shareholders and directors of Brownlee Hammond & Associates Pty Ltd, Insurance Brokers. Since then, Jack Hammond has no financial or any other interest in any business associated with Jim Brownlee. They remain good friends. Jim Brownlee requested Jack Hammond to review and publish the above letter. The final form of the letter was authorised by Jim Brownlee.