The federal government’s move to scrap the backdated limit of the $500,000 lifetime non-concessional contributions (NCC) cap for superannuation is mostly good news for retirement income planning, the Institute of Public Accountants (IPA) has said.
“The government has realised that moving the goalposts has warranted a policy rethink,” IPA chief executive Andrew Conway said.
“However, we are disappointed that the top in the NCC cap has been traded off for other simplification measures that were proposed, such as the abolishment of the contributions work test for those aged 65 to 75.
“Removing the complexities associated with applying the work test for individuals aged 65 to 75 would have simplified and improved the flexibility of the superannuation system.”
Conway said the other proposed super reform measures that might have survived the trade-off included the abolition of the income test or 10 per cent rule, the increase in the income threshold for the purpose of the low-income spouse tax offset, and the introduction of the Low Income Superannuation Tax Offset (LISTO), which seeks to effectively return the tax paid on concessional contributions.
“The introduction of LISTO is in fact a name change from the Low Income Super Contribution or LISC. We support this measure on equity and fairness grounds,” he said.
“Enshrining the objective of superannuation in legislation, which the IPA has long advocated for, is also an important step forward, however, we are concerned with the draft in its current state.
“The primary objective ‘to provide income in retirement to substitute or supplement the age pension’ places the focus of superannuation entirely on the age pension.
“The objective of superannuation also needs to focus on the two other pillars of our retirement system, namely superannuation and other voluntary savings.”
