Superannuation shake-up bonus - $50,000 and out-of-work accountants

RETIREMENT savings to get a boost under rules banning financial advisers from receiving superannuation commissions.

New rules to ban commissions paid to financial advisers will boost retirement savings / File

THE retirement savings of as many as four million Australians may rise by as much as $50,000 under rules banning financial advisers from receiving superannuation commissions.

And many accountants may be out of work if the Federal Government's tax review simplifies the system so Australians can choose not to file tax returns, The Daily Telegraph reports.

Financial Services Minister Chris Bowen will today unveil a financial advice sector overhaul that will impose a legal duty on advisers to act in the best interests of their clients.

Under rules to take effect from July 2012, Australians investing with retail superannuation funds will be able to cancel financial advice that eats into their retirement savings.

The Industry Superannuation Network's David Whiteley said that over a full working life, the reforms could add $50,000 to the retirement savings of Australians who take out a new retail superannuation product from July 2012.

Members of those funds pay fees of 0.5 per cent a year for financial advice they often do not receive.

The reforms will also end the conflicts of interest that now taint financial advice when advisers are paid commissions, given holidays and other kickbacks for recommending certain superannuation or managed investment products.

It is estimated that 85 per cent of Australia's 18,000 financial advisers are associated with a financial product manufacturer and the commissions they receive make up the bulk of their income.

"These reforms will see Australian investors receive financial advice that is in their best interests, rather than being directed to products as a result of incentives or commissions offered to the adviser," Mr Bowen said.

The reforms, the Government's response to a parliamentary report handed down last year, are designed to end the conflicts of interest and the mis-selling of financial products that resulted in tens of thousands of ordinary investors losing their homes - and millions in retirement income - in collapses such as those of Storm Financial, Opes Prime and Westpoint.

Under the reforms, the powers of the Australian Securities and Investment Commission will be expanded so they can act against unscrupulous financial advisers.

Meanwhile, Treasurer Wayne Swan has flagged major tax system changes that could remove the need for many Australians to file tax returns.

"More than 70 per cent of Australians seek the assistance of an accountant or a tax professional simply to fill out their tax returns," he said.

"So we need to focus on making it fairer and simpler so we can build a stronger economy."

One way is to allow people to claim an average amount for work-related expenses and compel them to file a tax return only if they want to claim a higher amount.