An Australian accounting firm has predicted the delay in raising the superannuation guarantee to 12 per cent as a result of abolishing the mining tax could see SMSFs grow at an even faster pace in the coming years.
“Clearly as money devalues and the cost of living continues to increase, the government’s decision to not increase compulsory contributions is a blow both to those nearing retirement as well as younger Australians who will accumulate far less super over the next few years,” Chan & Naylor managing director Ken Raiss said.
“It is therefore imperative that more Australians step up to take control of their financial destiny by building the necessary funds required for a full 30 years or more of independent retirement income.”
The need for Australians to take greater control of their retirement savings in the current economic and political climate is what will drive further growth of SMSFs as they offer more control and investment flexibility than industry and retail funds.
Raiss said he believed the government might consider supporting an even greater shift toward SMSFs.
“With the welfare safety net already under severe strain, more Australians must be encouraged to prepare for an independent retirement, and being able to purchase and retain an asset that grows in value over the next 30 years within super is an excellent way of achieving this outcome,” he said.
He also suggested the government develop innovative ways of generating interest in retirement savings among younger Australians as part of its national financial literacy strategy.
“Younger Australians must start looking at the world differently and start assuming greater financial responsibility for themselves, which will leave more in the welfare coffers for those who can’t,” he said.
“Superannuation is not the only retirement vehicle, but at end of the day, if it is carefully managed, then it is the most tax-effective and egalitarian mechanism for one and all.”
