Small Independent Superannuation Funds Association (SISFA) has questioned the Government’s recent decision to pause indexation of the superannuation concessional contributions caps in 2013-2014.
The Government said the move will provide savings of $485 million, but SISFA expressed concern that cuts such as this could become self-fulfilling for those Australians who do not have enough superannuation for a comfortable retirement.
"If the Government can ‘pause’ indexation now, what is to stop a future Government from again ‘pausing’ indexation or even ‘freezing’ indexation in the interests of balancing some other budget need?" asked SISFA chair Michael Lorimer.
Such pauses outside superannuation guarantee issues may become too tempting for future governments seeking to limit revenue loss when they have budget or surplus issues to consider, he said.
"SISFA calls for a sensitive and permanent solution for those under-resourced superannuation accounts for people who are now counting on catching up on their superannuation with growing concessional caps. SISFA asks the Government to stay consistent," he said.
The knock-on effect of concessional cap changes is that non-concessional caps are also assumed to be ‘paused’ regarding indexation, according to SISFA.
SISFA also questioned why the treatment of non-concessional contributions not mentioned in the announcement where the Government outlined the changes.
Non-concessional contributions should have risen from $150,000 per year to $180,000 per year for up to three years and a total non-concessional contribution cap from $450,000 to $540,000, according to SISFA.
