Industry presents united front on retaining LISC
The superannuation industry has presented a united front to the Government on the need to retain the Low Income Superannuation Contribution (LISC), with both the Association of Superannuation Funds of Australia (ASFA) and the Australian Institute of Super Trustees (AIST) saying it should survive the removal of the Minerals Resource Rent Tax.
An ASFA submission to the Treasury has gone so far as to argue that retention of the LISC is more important in equity terms than the on-time delivery of the increase in superannuation guarantee.
The ASFA submission, signed by the organisation's chief executive, Pauline Vamos, suggests the Government should resort to other means of funding the LISC, in circumstances where the superannuation co-contribution regime will be insufficient to offset the inequity with respect to low income earners.
"ASFA does not consider that the Superannuation Co-contribution is sufficient to address the
inequity of low income earners paying too much tax on their concessional contributions," it said. "The co-contribution only applies in regard to voluntary, non-concessional contributions made as a
discretionary spend from after tax income."
The submission claimed that only around one million individuals qualified for the co-contribution each
year, with a substantial proportion of those qualifying having incomes over $37,000.
"ASFA considers that while the co-contribution serves a purpose in encouraging voluntary contributions as a matter of equity, building confidence and ensuring that low income earners can top up their age pensions adequately requires the LISC to be maintained," it said.
The submission said that in regard to the relative impact of the two superannuation measures in the Government's legislation, the removal of the LISC "has a much bigger impact in absolute terms for the workers concerned, although clearly the pause in the SG affects more employees".
"As such, while ASFA does not support either proposed measure, we have particular concerns with the proposed abolition of the LISC and recommend strongly that this be reconsidered," the submission said.
AUTHOR
Staff Writer
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
