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The Henry Review is unlikely to recommend raising the superannuation guarantee and super concessions might see a decrease, said KPMG director of superannuation and pension funds Ross Stephens.
Stephens highlighted what is likely to come out of the Henry Review of taxation during his session at the Self-Managed Super Fund Professionals’ Association of Australia (SPAA) conference in Melbourne.
He said the Henry Review is likely to raise similar issues to those highlighted in its interim report on super, which was released in May 2009. Although it is unlikely the Henry Review will act on all the recommendations made in that interim report, Stephens said it might consider the retention of the three pillar structure, maintaining the 9 per cent super guarantee rate, aligning the preservation age with the pension age, improving the fairness of the pensions means test, improving incentives to work beyond retirement age, improving fairness of super concessions, and improving the ability of super to manage longevity risk.
“The Government has shown a lot of interest in the issue of longevity risk,” Stephens noted.
The Henry Review is likely to further assess whether the 9 per cent SG rate is adequate, although there’s a lot of contrary views on that issue, he said.
Stephens said other areas for consideration were likely to be keeping a five-year gap between the preservation age and the pension age, measures to promote and improve longevity risk products, how super is taxed in the context of broader taxes on savings and investments, taxes on benefits from untaxed funds, taxes on death benefits, and age limits for making super contributions.
Stephens added that it could consider decreasing super concessions.
“They are the largest present Federal Government tax expenditure,” he said.
He added that the Henry Review is likely to have an emphasis on a need to lower the tax rate in super for lower incomes.
“There is a surprisingly large number of people in the $35,000 and under group,” Stephens said.
“Given the costs involved, this may be offset by a potential higher rate for higher incomes.”
Stephens said that while tax-free benefits are off limits for the Henry Review, that does not mean it would not comment on this issue.
