The case for joint super is strong

Given our banking system has operated joint accounts very efficiently for many years, superannuation industry criticism of the proposals to introduce joint superannuation accounts is disappointing.

The motivation for the proposal is to help reduce gender inequity in the distribution of superannuation benefits. Super splitting is now a firmly entrenched component of the family law system with the courts able to redistribute super account balances between partners. But the superannuation system itself offers only limited opportunities for couples in ongoing relationships to share their superannuation benefits.

The arrangements are restricted and require the co-operation of individual super funds to arrange the transfer of funds. The maximum amount that can be transferred annually between spouses is 85 per cent of the previous year's concessionally taxed contributions.

These arrangements allow the transfer of not more than $30,000 of non-concessional contributions annually to a spouse account. While helpful, it doesn't facilitate sharing existing balances between spouses.

The basic question for the government and superannuation industry is why shouldn't couples be free to split their superannuation equally between them?

Apart from the inertia of government to initiate change, until recently there's been little public recognition that, for a variety of reasons, including lower pay and lengthy absences from the workforce, women generally have much lower super balances than men. When this is the result of non-participation in the paid workforce for family causes, there's no reason why the working spouse shouldn't be able to move part of their super to the spouse.

Voluntary access to a joint super account would be a simple way to achieve this. Not all couples would want to share their super with their spouse for several reasons, including age differences and the ownership of other assets.

Safeguards such as requiring that if a joint account were closed, the balance would be shared equally would protect against manipulation when one partner had access to their super before the other. Operating a joint account would require agreeing to the same investment strategy but this would benefit those many families happy to allow the fund trustees to make decisions for them.

Joint accounts would also facilitate retirement planning by allowing the couple to focus on the combined value of their super.

For practical reasons, it wouldn't be possible to operate a joint account in defined benefit plans but it should be possible to roll over defined benefit lump sum pay-outs to a joint super or pension account.

The age pension system assesses couples on the basis of their combined assets and incomes. A joint super account would be consistent with this approach.

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Daryl Dixon

Executive Chairman

Daryl Dixon is one of Australia’s foremost investment experts and a well known writer and consultant. He has provided trusted advice to thousands of personal clients over more than 25 years and is an acknowledged expert in the areas of tax, superannuation (including public sector superannuation), social security and investments.

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