FSC warns on super caps
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.
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
