Tweaks made to superannuation in the Abbott Government's first Budget are tiny steps as it waits for recommendations from this year's Financial Systems Inquiry.
That is the view of Deloitte national superannuation leader Russell Mason, who said he was surprised by the Government's decision to delay the superannuation guarantee (SG) by an extra year from 1 July 2021 to 2022.
"Although this does of course mean that it will take longer for people to build up their super — especially when you consider that the previous Labor government had flagged 2019 as the 12 per cent SG date — the long-term impact on superannuation savings individually will be minimal," he said.
The Government announced it would include an individual's superannuation pension in the incomes test for pension eligibility but it did not include the family home, despite recommendations from the Commission of Audit.
Mason added an increase in the age pension age to 70 by 2035 would lead to people drawing down more super than if the pension age remained at 67.
"Despite these changes Australia still need to better address adequacy in retirement. Unless people work longer their superannuation accumulation will be inadequate," he said.
Superannuation partner John Randall is pleased the Government changed the tax rate payable on excess contributions, which is currently at 46.5 per cent and will be 47 per cent from 1 July 2014.
"Now backdated to 1 July 2013, individuals will have the option to withdraw any excess contributions made from 1 July 2013 together with related earnings, and pay tax at their marginal rate on the earnings," he said.
The annual non-concessional contribution cap will go up to $180,000 from 2014-15, up from $150,000. The bring-forward rule will permit a one-off non-concessional contribution of up to $450,000 over three years, or $540,000 over three years from 2014-15.