ASFA likes LISTO, dislikes concessional cap reduction
While the Association of Superannuation Funds of Australia (ASFA) welcomed the introduction of the Low Income Superannuation Tax Offset (LISTO) in Tuesday's Budget, it did not support the reduction of annual concessional caps to $25,000.
ASFA said the LISTO scheme provided support for low income earners, as it will give a benefit of up to $500 a year for over three million people, and made the super system stronger.
However, ASFA chief executive, Pauline Vamos, said the concessional caps change would not help individuals with low balances catch-up on their super.
"We do not support the reduction of annual concessional caps to $25,000. While today less than two per cent of people (around 255,000) with superannuation make contributions above $25,000, a significant number of such individuals that have low balances are attempting to catch up," Vamos said.
"For instance, around 36,000 women with balances less than $200,000 in 2013/14, were making contributions in excess of $25,000.
"The changes to the flexibility caps will allow women, in particular, who currently retire with less than half the superannuation of men, to catch up. However, the restriction of a five-year period for the calculation of previously unused cap amounts restricts the effectiveness of this."
ASFA noted it still needed time to fully understand the impact on retirement incomes in terms of the Budget proposal for a cap of $1.6 million on super balances that can be transferred to the tax-free retirement phase.
The change will affect more than 100,000 people and result in additional revenue for the government of $1.15 billion by 2019/20.
ASFA also said some of the measures had the potential to significantly increase administration costs of funds and that the costs would likely be passed on to all fund members, not just those directly impacted by the changes.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
