Australia: Keep It Simple

Last Updated: 12 October 2007
Article by Peter Bobbin

The changes to superannuation are complex, unfair and rushed. More time is needed for people to make decisions about their long-term commitments.

I write this in May, feeling helpless at the prospect of the deception of so many. You will read this with only weeks to do something about it, but apathy or lack of time will dictate that you won’t. The few will have deceived the many and the simplified superannuation regime will commence.

It is said that the difference between an old man and an old gentleman is money. The more he has, the more of a gentleman he can be. This is why the financial planning profession is so important.

A belief that senior bureaucrats in the Australian Securities and Investments Commission share with senior professional financial advisers is an understanding that retirement planning, no matter what the current age of the investor, is about their life in retirement. Get it wrong and that life is poor, get it right and it is not.

The High Court recently recognised the importance of retirement advice and the need for people to take care to ensure the advice they give is correct. The High Court attributed liability for the poor superannuation advice that resulted in a lower income in retirement to the one who was responsible for it. This may seem unremarkable, perhaps, but when you consider that the poor advice was given 34 years ago, you can begin to see the long tail of responsibility that superannuation can impose.

The “Costello Coup of 2007” has been billed as the $1 million superannuation opportunity of a lifetime. How Treasurer Peter Costello succeeded in making people think this was an opportunity will go down in infamy beside the claims of former prime ministers who said that no child overboard in a banana republic would live below the poverty line!

The change to super under the Tax Laws Amendment (Simplified Superannuation) Act 2007 is not an opportunity. It is a limitation that never existed before. But why am I the only one outraged by this deception?

We should be demanding more time from the government to come to grips with simplified super, and the June 30 deadline should be extended. From July 1, 2007, the coalition government will entrench the need for financial planning, despite Costello claiming the demise of the financial planner. The need for the planner reflects the fact that simplified super is not simple. Research commissioned by Mercer Wealth Solutions tells us that for Australians aged 50 or over, 33 per cent were happy, 28 per cent were perplexed but hopeful and 39 per cent were disinterested and disheartened about simplified super.

None of this should upset me. After all my law firm and I have worked well with the financial services profession created and encouraged by governments over the past 25 years. But can we please demand that this farce of an opportunity be declared for what it really is?

I am also concerned about the complexity of the transition to the new regime. We should be demanding its delayed implementation until the principles of transition are clearly known and understood. Radical changes ushered in Australia’s modern super system, which then suffered 24 years of twisting and tweaking, but at least we understood how it worked. People sought long-term advice to cater for their long-term retirement planning.

Costello then gave Australians 13 months to change their lifetime plans. Since then, the Treasury, the Australian Taxation Office, Centrelink and other government departments have been coming to grips with what it all means – issuing press statements, draft bulletins, outline regulations and warning of fact sheets to come. This is not fair.

I call for the delay of simplified super, not the good parts, just the bad parts. Amazingly, the bad parts have been converted into “opportunities”. The tax-free super for those over 60 years of age should and can start on July 1. But more time should be given to work out how much a person now needs to contribute to super to finance the desired life of a gentleman (or gentlewoman). The many who have complex super pension plans, developed in the bad old days, need more time to plan their transition to the new, so-called simplified super pension.

Don’t get me wrong: I applaud what the government has done. Australia’s superannuation rules had become too complex. This is what Ken Henry, the Secretary to the Treasurer, implied when he admitted he was having trouble dealing with them. But what amused me was Henry’s comment that the Treasury had noticed a big increase in people seeking professional financial advice and this could cost hundreds, sometimes thousands of dollars. “We didn’t want to impose that burden on retirees,” he said.

Why am I bemused? Because the same people still need advice about simplified super but they have little time to obtain it. Nevertheless, they are expected to make life-changing decisions now. This is not fair.

Just two months ago, I said the following of the new system: “The government has created a system that encourages maximum input into simplified super (up to $1 million this year), which is neither simple nor super for achieving the super member’s longer term personal wishes.” Some accused me of writing tongue-in-cheek on the financial rewards that future lawyers will reap from the mistakes of the Costello-enthused many who will blindly pump billions into super. I was serious.

This rush has distorted the naturally cynical Aussie nature; many have turned off their crap detection meters. Planning has gone out the window. Please remember my words. I will remind you of them when complaints against lawyers begin to rise.

Should the allocated pension be cashed in before or after July 1? Can the complying pension be cancelled at law and re-configured as an account-based pension? Will this be open to challenge by future beneficiaries? Can any reserves within the superannuation fund be allocated? To whom and when should it be done? If allocating the reserve to a member-investor, will this count towards their contributions cap? What about the rights of the reversionary pensioner if the primary pension is quashed – will these reversionary pension rights have been unlawfully cancelled? Will superannuation trust deeds need to be updated yet again?

I am disturbed at the lack of knowledge and planning about what is occurring. Not among the well off – experience tells me they are investing time and money into seeking sound advice. The rest do not know they need professional advice, don’t understand the implications of the changes, or cannot afford the time or money for professional advice.

Simplified super is a new burden. It is not about opportunities: it is about limits and restricting access to funding a future retirement that we are told is becoming increasingly longer. And people are retiring earlier. The average age for retirement for those over 45 years of age is 52. This is eight years before tax-free simplified super can start. Preservation also means many people who have pumped money into super will be unable to call upon their funds when they need them.

The money will not be accessible when they choose to retire and they will not have enough non-super savings to bridge the retirement gap. For women, the problem is greater – those over 45 years of age retire at an average age of 47. They must therefore endure a 13- year funding gap that they will not have planned for.

Anyway, why should only the lucky few who can put their hands on $1 million enjoy this “opportunity”? What about the rest of Australia? This limitation/opportunity needs to be extended to all. Why not make it a $1 million additional lifetime contribution cap? This would be fair to all those who planned to put more into super but whose circumstances did not allow them to do so before June 30, 2007.

In March, a mere three months before the start of the most significant changes to Australia’s retirement system for 25 years, the ATO advised that it was preparing a major public awareness and education program on the reforms. I am still waiting for it to start.

The ATO said it was working to have information available by the start of the new regime on July 1. That is too late. I have sympathy for the ATO; the simplified super restrictions have been dumped on it and it has had little time to react. Treasury is still issuing draft regulations that will affect a myriad aspects of superannuation. How can anyone properly plan for their long-term financial future in this situation?

The limits within simplified super must be delayed. Join me and demand that the government allow ordinary Australians more time to plan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.