Very high super balances are a result of old rules: ASFA
Most very high superannuation fund balances have been the result of previous rules allowing very large contributions and transfers of assets to be made into super, according to the Association of Superannuation Funds of Australia (ASFA).
An ASFA report found that most of this money is now being pulled out as tax-free retirement income or is retained with tax-free investment earnings in super funds.
Although these features of the system that have been driving these balances no longer exist there is still the ability to accumulate a large balance, but at a slower rate.
The report cited large caps for after-tax contributions and the ability to roll over proceeds from the sale of small business into superannuation at concessional capital gains tax rates, as avenues for large balances to continue to grow.
These high balances fell into the category of having more than enough to fund a comfortable lifestyle in retirement in terms of ASFA's retirement standard.
ASFA said that with these very high balances it is possible to argue that the accumulation of superannuation becomes more about using the tax-advantaged status of this savings vehicle to build wealth or for estate planning purposes, as opposed to delivering an income stream that helps deliver a comfortable retirement.
Last week ASFA said that it would be appropriate to question whether or not the same tax concessions that are applied to lower balances should equally be applied to individuals with very high levels of super.
In Australia there are 70,000 superannuation balances in excess of $2.5 million.
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