Lift the concessional caps, says IPA
The Government should lift the concessional contributions caps on superannuation for those aged over 50 to $50,000 a year while for those aged over 60 it should be $75,000 a year, according to the Institute of Public Accountants (IPA).
The IPA has made its call in a pre-Budget submission delivered to the Government this week in which it has also called for a demographic approach to superannuation policy, particularly focused on women and those over 50.
The pre-Budget submission said that while there would be an immediate cost to Government of increasing the concessional caps, this would be offset in future years by reduced costs of government aged pensions, with the life-time cost of the policy change to Government actually being neutral.
The IPA submission argues that demographic factors should be key to the development of future superannuation policy based on the reality that groups react differently to superannuation policies due to their age, wealth and gender.
"Rather than a ‘one-size-fits-all' approach to policy, a more nuanced approach which takes demographic factors into account should be adopted," the submission said. "We believe this will lead to better superannuation outcomes."
The submission said the IPA believed two demographic groups required special attention — those aged over 50 years approaching retirement and women.
"Those aged over 50 should be provided with increased concessional caps," it said. "In addition, policies should address the distortion to contributions which arise when women take time out from the workplace for extended periods to care for their children."
The submission said the IPA had identified gender as an important demographic likely to respond to targeted policy initiatives.
"Women on average have lower superannuation than males of the same age (other than those in the youngest age bracket)," the submission said.
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