Call to not reduce super contribution cap

The Institute of Public Accountants (IPA) is calling for the Government not to reduce the cap on concessional superannuation contributions, in a submission to the Treasury this week.

IPA chief executive, Andrew Conway, said that the IPA would not support the proposed changes in the second and third tranches of the super reform package.

"The IPA does not support the reduction of the contributions cap to $25,000 and more so, we do not agree to the reduction of the current cap of $35,000 for individuals aged over 50 years of age," he said.

"People aged over 50 should be encouraged to make further superannuation contributions if they have the capacity."

The current annual concessional contributions cap for over-50s is less than a third of what it was 10 years ago. It sits at $35,000, which Conway said was adverse to Australians being able to build a self-reliant retirement. On top of that, those hoping for a self-funded future would face the hit of extra tax burdens.

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Conway said that the delay for individuals being able to take advantage of unused cap amounts from previous financial years had also played a part in the IPA's opposition on the cap reduction.

"The situation has been further exacerbated by the Government's announcement to defer the proposed ‘catch up' measure until 1 July 2018," Conway said.

"This effectively means the first ‘catch up' will not take place until the 2019/20 financial year."

Conway said the IPA would continue to oppose the reduction of the contribution cap to $25,000 and more and $35,000 for over-50s, as encouraging contributions could help address any superannuation balance shortfall.