New Association of Superannuation Funds of Australia (ASFA) research has identified the individuals who will be most affected by the proposed $3 million superannuation soft cap.
The ASFA paper, “Equity and Superannuation”, indicated the measure will have the greatest impact on men aged 60 and over, half of whom are retired. In addition, it recognised those people caught by the policy who are still working are likely to be employed in professional roles.
Further, the study showed the implementation of a higher tax rate for members with total super balances over $3 million, or superannuation soft cap, will lead to a reduction of 9.5 per cent in tax concessions associated with investment earnings.
The industry body’s analysis also found the recent amendments to the tax settings of the superannuation framework had already improved the equity of the system.
Another key finding was the majority of superannuants do not have large account balances when they pass away.
The report also established the fact superannuation is providing regular income streams for close to 2 million Australians in retirement and as such improving their retirement income.
In addition, it was found the retirement savings system is easing the pressure on the support drawn from the age pension.
“As a result of increasing superannuation account balances, at age pension eligibility age an increasing proportion of retirees have substantial private incomes,” the super industry peak body stated.
“Only around 40 per cent of Australians aged 66 to 69 currently receive the age pension. Without super, there would be more than 500,000 extra individuals receiving the age pension.”
According to ASFA deputy chief executive Glen McCrea, the government will be presented with more opportunities to improve the equity of the system in the immediate future.
“The upcoming federal budget provides an opportunity to further improve equity in Australia’s superannuation system,” McCrea said.
”Introducing superannuation guarantee payments on paid parental leave and increasing the upper threshold for the low-income superannuation tax offset would substantially assist low-to-middle-income earners, particularly women.”
