Superannuation contribution caps should be extended to allow for people who have spent long periods out of the workforce to add more to their superannuation via special concessional contributions according to a NSW central coast based planner.
FMS Group director Christine Hornery said the new contribution caps which took effect from July 1 did not factor in the need for people who have been out of the workforce for extended periods to build up their superannuation to adequate levels.
Hornery claimed the new higher contributions caps were not high enough for this group who should be able to access ‘catch-up' concessional contributions caps to help them build larger superannuation balances before retirement.
"Many women and some men leave their jobs to raise families, sometimes for a prolonged period of time and therefore may not receive superannuation guarantee contributions for many years. Even when they return to work, they cannot have concessional contributions made to their superannuation accounts beyond the new annual $30,000 cap, or $35,000 if they are aged over 49," she said.
Hornery said the current concessional and non-concessional contribution caps offer no provision for people to make up for missed superannuation contributions once they return to work and limits them to the same caps as a person who has spent a lifetime in the workforce.
According to Hornery recent statistics published by the Association of Superannuation Funds of Australia indicate that more than a third of all women and about 60 per cent of those aged between 65 to 69 state they have no superannuation whatsoever.
"People starting from so far behind the eight ball need as much favourable tax treatment as possible — which is why they need a higher concessional contributions cap."
