Budget contribution cap rise welcomed
The financial services industry has broadly welcomed the Federal Government's decision to pull forward the implementation of higher superannuation concessional contribution caps by including the legislation in the Federal Budget.
The industry's views were reflected in the comments of Association of Financial Advisers (AFA) chief executive, Brad Fox, who described the inclusion of the necessary legislation in the Budget as a step in the right direction.
"Baby boomers, especially women, only have a short window remaining to get adequate super for retirement," he said.
Financial Planning Association (FPA) chief executive Mark Rantall similarly welcomed the higher contributions caps, but cautioned against further super meddling in the Budget.
"We are happy that contribution caps have been raised, and that refunds of over-contributions have been allowed to reduce the penalty tax for inadvertent breaches of concessional limits. We lobbied for these changes and we welcome them.
"However, we hope that the Budget next week does not impose further changes or taxes on superannuation. To maintain confidence in what is an important long-term savings vehicle, we support a bipartisan approach and an end to continual tinkering with superannuation or its use to cover budget deficits," Rantall said.
He said saving for a dignified retirement was a matter of national importance. The industry should be encouraging retirees to be self-funded rather than relying on the pension, which was clearly inadequate and costly to future generations.
The Government's proposed super changes were outlined by the Treasurer, Wayne Swan and the Minister for Financial Services, Bill Shorten in early April, but there was no suggestion at that time that the changes would be wrapped up in the Budget process.
However Shorten yesterday announced the necessary legislation was being brought forward, with those over 60 being able to take advantage of the new, higher concessional contributions cap from 1 July this year, and those aged over 50 being able to access them 12 months later.
"The Government believes that it is important to allow people who have not had the benefit of the Superannuation Guarantee for their entire working lives to have the ability to contribute more to their super as their retirement age approaches," he said.
By lifting the concessional contribution caps for those aged over 60 by a further $10,000, the Government is effectively reversing the trend of the previous Budgets at which it lowered the caps.
The legislation necessary to fix the Government's excess contributions regime will be introduced separately to what is now being regarded as a pre-election Budget measure.
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