Helping Australian families better prepare for life’s financial challenges

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The Friendly Societies of Australia today said the Financial System Inquiry should promote measures in its final report that support sustainable pre-retirement life-event savings and investment products, recognising the positive role they play in helping Australians become more self-reliance and fostering greater competition in the delivery of financial services.

The FSA lodged its second submission to the Financial System Inquiry on behalf of Friendly Societies across Australia who help people plan for future life-events through savings, investment and insurance products.

FSA President Matt Walsh said while some matters had been referred to the Tax White Paper process, the FSI still has a major role to play in supporting a better savings culture.

Matt Walsh

“The FSA urges the Inquiry to recognise the benefits that an increase in medium to long-term life-event savings would deliver to our society. This includes a lift in national savings, better education outcomes and a reduction in the need for government welfare given people could better deal with financial challenges through saving via these vehicles.”

In its second submission to the FSI Panel, the FSA argues insurance bonds also increase the employment opportunities available to Australians by facilitating access to a higher standard of education and can increase government tax revenue by diverting some discretionary savings away from superannuation that is only taxed at 15%, or less.

The FSA is pleased that the FSI’s interim report has noted the competitive disadvantage of some savings vehicles compared to super because of the differentiated tax rates.

“We have consistently argued for a reduction in the tax rate on friendly society investments from 30% to 20%. We are pleased that the FSI Panel acknowledged that the tax system treats some savings vehicles more favourably than others and look forward to taking this issue up strongly again through the separate taxation review.”

The FSA says products of its members inject much needed competition into the financial system by assisting Australians to:

  • fund future common and foreseeable life-events, such as home deposits and ownership, raising and educating children, sinking funds to pay debt, health and aged-care, funeral expenses, job loss provisions, formal child care funding, and support for aged parents or family members with disabilities;
  • better prepare for difficult financial times that inevitably arise at some point in their lives; and
  • improve and sustain financial and social standards via self-reliance and a savings culture that does not resort to social welfare dependency in the first instance.

The full submission is available at: http://www.customerownedbanking.asn.au/members/friendly-societies/fsa-policy-agenda

The FSA is the industry association that represents 10 of Australia’s 12 APRA-registered friendly societies.

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For more information and interview requests please contact:

Matt Walsh – Phone: 08 8236 4706 or 0418 113 878

1 September 2014