The superannuation industry body has decried the lack of a plan for securing the retirement future of Australia’s baby boomers in the federal budget.
Chief executive officer of the Association of Superannuation Funds of Australia Pauline Vamos said a long-term strategy for encouraging superannuation was needed and changes announced in the budget risked turning people away from investing in superannuation.
“The big thing that’s missing in this budget is (a strategy for) how we are going to cope with an ageing population that’s going to be living longer and will need sustainable retirement incomes,” she said.
High income earners have suffered a double-whammy on their retirement savings in the budget with increased taxes on contributions for those earning more than $300,000 and a two-year delay to a planned increase in the concessional contribution cap for over-50s.
Under a measure announced in the 2010 budget, workers aged over 50 with less than $500,000 in superannuation would have been able to put an additional $25,000 into their retirement fund with concessional tax treatment.
That measure has now been delayed until July 1, 2014 and Ms Vamos said the measures were short-sighted.
“Making small changes at the edges to gain revenue for short-term political gain does not contribute to the development of long-term sustainable retirement incomes policy,” she said.
“Australia’s taxation system has a strong role in influencing investment decisions through establishing different incentives for different kinds of investments.
“In the case of high-income earners, they have other investment vehicles where tax incentives apply and there is a strong likelihood you will see more money moved into things like negative gearing, rather than super, as a result of this change.”
The Treasury Department said the deferral of the implementation of the higher cap for superannuation contribution would deliver “significant synergies and efficiencies” by coming into effect at the same time as changes to super fund reporting due in 2014.
Treasury said the deferral of the start date for the higher concessional contributions cap will save $1.46 billion over four years.
In another measure, individuals earning more than $300,000 a year will lose some of the favourable tax treatment given to superannuation contributions, with payments to be taxed at 30 per cent rather than 15 per cent.
The change is expected to affect about 128,000 people but will save the government $947 million over four years.
The government will increase the superannuation guarantee for all workers from nine per cent to 12 per cent starting from July 2013.
