Just days out from the Federal Budget, the Financial Services Council (FSC) has utilised actuarial research from Mercer to argue against any lowering in concessional superannuation caps.
The FSC/Mercer research warns that the Government may actually be placing a greater cost on the Budget if it opts to reduce the concessional superannuation cap from its $30,000 level down to $20,000.
The research cites the example of a female employee earning an income of $65,000 for 10 years from age 20 to 30 and who then takes a 10-year break before returning to the workforce at $65,000.
The scenario then suggests that at age 45, the woman is promoted with their income increasing to $80,000 before they are promoted again at age 50 with their income increasing to $100,000.
It said the woman’s higher income allowed them to first pay down their family home and then salary sacrifice $20,000 a year into their superannuation from age 50 to their retirement at 67 years.
Under the current $30,000 super cap, the FSC/Mercer analysis projects a super balance of $992,000 and an age pension of $44,000 while under a $20,000 cap, it projects a super balance of $760,000, and an age pension of $119,000.
It said the total cost to Government would therefore be $11,000 higher under the reduced concessional contribution caps.
