The Financial Planning Association (FPA) has joined with other industry organisations in warning the Federal Government of the consequences of tinkering with the nation’s superannuation regime.
While welcoming a number of improvements contained in the Budget, the chief executive of the FPA, Jo-Anne Bloch, said superannuation changes that became effective only two years ago have been used to fund some of these initiatives and this is a disappointing outcome.
“It is important to build a savings culture among Australians by providing people with incentives,” she said.
“Tinkering with superannuation undermines confidence in superannuation and we need to work hard to ensure that people remain committed to preparing for a better retirement.”
Bloch said that while the FPA was disappointed that the Superannuation Guarantee would remain at 9 per cent, it was understandable in the current economic circumstances.
However, she said the Budget had not provided any incentives for lower income earners to save through superannuation and even though the reduction in the co-contribution formula was temporary, it had removed contribution incentives for higher income earners to save for retirement.
“Long term, this will encourage dependency on the age pension, creating a strain on a system designed to help those who really need it,” Bloch said.
She said that Australians would now find themselves staying in the workforce longer, working to build their wealth before the 2023 date set for the age pension qualifying age to increase, as announced in the Budget.
