AUSTRALIA - The Australian government has introduced reforms to give employees greater priority on the creditor's list to secure superannuation benefits in the event of bankruptcy.
The government’s employer insolvency reforms propose to improve the chances of former employees receiving entitlements, should the employer enter into bankruptcy.
It also appears employees’ unpaid super will get greater priority on the creditors list as part of government reforms announced by Chris Pearce MP, parliamentary secretary to the treasurer.
CEO of the Association of Superannuation Funds of Australia (ASFA), Phillipa Smith said: “ASFA congratulates the government for including the measure in the reform proposals, and for taking into account the importance of superannuation entitlements for employer bankruptcy.”
In addition, the Tax Laws Amendment (Superannuation Contributions Splitting) Bill introduced into government this week is designed to allow members to split both their personal and employer superannuation contributions (including SG) with their spouse.
The objective of government’s measure is to broaden the accessibility of superannuation to those who are outside the paid workforce. Specifically, it will provide low income spouses with their own assets in their own name and under their control.
However, the new provision will not be mandatory for pension funds and draft regulations provide that contributions made on or after 1 January 2006 will be eligible to be split where funds choose to offer this service to its members.
John O’Shaughnessy, deputy CEO, Investment and Financial Services Association (IFSA) said: “Couples almost invariably approach retirement planning together, and this initiative will allow a couple to adjust their mutual superannuation on the way to retirement.”
Other initiatives include; giving five million workers the right to choose their own super fund for the first time; removing the superannuation surcharge which applied to employer contributions made by high income earners and removing the work test which prohibited Australians under 65 to contribute superannuation if they weren’t in employment.
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