The SMSF Association’s 2015 federal budget submission has called on the government to provide a more equitable superannuation system through continuing the Low Income Superannuation Contribution Scheme and raising the concessional contributions cap.
SMSF Association chief executive Andrea Slattery said the submission highlighted those areas because the industry body felt low-income earners and individuals with broken work patterns were unfairly disadvantaged under the current retirement savings regime.
“The association is firmly of the opinion that the low-income superannuation contribution should be maintained beyond 2017/18 to ensure equitable treatment for the lowest-paid workers,” Slattery said.
“We opposed this policy announcement when it was made and still believe it’s the wrong policy decision.
“It’s also our belief that people with broken work patterns, such as women who have to leave the workforce to have children, can often be disadvantaged.
“There is an urgent need to find ways to provide opportunities for people whose working lives are disrupted to ensure a fairer system so they can grow an adequate superannuation balance.”
She said increasing the concessional contributions cap from its current level of $35,000 for people nearing retirement would help individuals with broken work patterns achieve an adequate level of superannuation entitlements for their retirement.
“From our perspective it’s imperative to give more opportunity for people to make contributions, especially later in life, to ensure adequate superannuation balances to provide for their retirement,” she explained.
The submission also recommended an end to the 10 per cent income test, which did not allow a tax deduction for additional voluntary super contributions when at least 10 per cent of a person’s income was derived as an employee.
“In our opinion this would allow all fund members to make tax-deductible voluntary contributions without having to satisfy the ’10 per cent rule’,” Slattery said.
“The alternative is that they can only make voluntary concessional contributions through salary sacrifice arrangements.
“In addition, removing the 10 per cent rule would alleviate the red-tape burden for businesses providing salary sacrifice arrangements, especially for small businesses and for fund members who need to ensure they comply with the 10 per cent rule.”
