Professionals’ Association of Australia is calling on the government to implement a higher concessional cap and accurate costing of superannuation taxation concessions.
In its submission to the Federal Government’s May Budget, SPAA also wants the government to explore polices to help people with broken work patterns improve the adequacy of their superannuation, and expressed strong opposition to the government’s decision to abolish the Low Income Superannuation Contribution (LISC).
CEO Andrea Slattery said these are the four significant superannuation issues that SPAA wants the government to address.
“In our opinion the current general concessional contribution cap level of $25,000 and $35,000 for older Australians is too low to facilitate adequate savings for retirement.
“The low concessional contribution cap base, together with the absence of adequate indexation, will deny many thousands of Australians, who typically have a greater financial capacity to save for retirement later in life, the opportunity to do so.”
SPAA strongly advocates that cost of superannuation tax concessions be considered in the context of the three pillar retirement income system to accurately reflect the long-term nature of superannuation, Slattery said.
“SPAA has previously argued that the Treasury tax estimates method of measuring the value of these concessions is biased against them and misinforms the policy debate.
“Although the cost of the concessions has not been a prominent issue with this Government, we still believe that it is important that their cost to government is measured in an accurate and appropriate fashion. This will better inform government, the public and the superannuation industry when forming future retirement income policy.”
Equity in superannuation is critical, said Slattery, therefore SPAA urged the government to reverse its decision to repeal the LISC.
“The LISC helps underpin the superannuation system by ensuring that those earning under $37,000 a year do not pay more tax on their compulsory superannuation contributions than they do on their income.
“This maintains the concessionality of the Superannuation Guarantee contributions for low income earners, essential for ensuring the superannuation system is equitable.”
SPAA urged the government to address the superannuation adequacy of people with broken work patterns.
“The issue of broken work patterns disproportionately affects female workers, who often take time out of the work force to raise families, resulting in many females having inadequate superannuation balances for retirement,” Slattery said.
“Female workers also have lower average wages and a higher incidence of part-time work, which reduces their ability to make contributions to save for retirement.”