The SMSF Professionals’ Association of Australia (SPAA) has called for superannuation to be removed from the short-term political cycle.
The plea comes as a result of the government agreeing to delay the increase in the superannuation guarantee (SG) levy to allow it to repeal the mining tax last week.
The parliamentary decision means the SG levy will now remain at its current level of 9.5 per cent until 30 June 2021, at which time it will rise by 0.5 percentage points a year until it reaches 12 per cent in 2025.
“What this decision highlights is the urgent need to have an informed debate about measuring the long-term budget cost of superannuation and what is considered an adequate income for retirement, especially when it’s considered that people are now living, on average, into their mid-80s,” SPAA chief executive Andrea Slattery said.
“In its submission to the Financial System Inquiry, SPAA recommended that major superannuation policy decisions be removed from the annual budget cycle and instead be subject to a five-year review as part of the intergenerational report. In light of this decision, the acceptance of that recommendation is more imperative than ever.”
According to Slattery, the government was sacrificing the nation’s long-term retirement goals in pursuit of short-term fiscal initiatives.
“By linking the abolition of the mining tax with the decision to freeze the SG for seven years, the government is again demonstrating that dipping into the superannuation ‘piggy bank’ is always an option when difficult fiscal decisions have to be made,” she said.
Furthermore, she argued last week’s decision worked to undermine Australian’s confidence in the superannuation system.
The industry body has been critical of any moves to delay an increase in the SG levy, including this year’s budget announcement that there would be no change to the level of compulsory super contributions until 2018.
Instead, Slattery was insistent the SG levy should rise to 12 per cent as soon as possible to ensure individuals had an adequate level of savings in their retirement.
