IPA calls for age-scaled superannuation structure
The Institute of Public Accountants (IPA) has called for a soft compulsion approach to superannuation contributions for younger Australians with compulsory contributions and higher cap limits for older Australians.
In its pre-budget submission, the IPA splits working Australians into three brackets based on engagement level. It argues that Australians under 40 are disengaged and should be able to spend their full income on other priorities such as travel, buying a house and starting a family.
Compulsion should kick in at 40, with "partially engaged" workers between 40 and 50 to comply with the superannuation guarantee as it is scaled up to 12 per cent, the IPA said.
"Fully engaged" Australians (those aged over 50) have a greater need and capacity to contribute to their super and so should be able to make up for the years they weren't adding to their super with the benefit of a $50,000 concessional contribution cap, increasing to $75,000 for those over 60.
Any annual contributions above this amount would then be taxed at the individual's personal tax rate but would not be subject to the excess contribution tax regime, according to the IPA proposal.
"A preferred system may be one that closely matches the level of taxpayer engagement at different age points," said IPA chief executive Andrew Conway.
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