CPA Australia has used its pre-budget submission for 2021/22 to call on the government to implement some specific measures to allow individuals, who accessed their superannuation early due to COVID-19-driven financial hardship, the ability to top-up their currently depleted retirement savings.
“Following the high level of early access of superannuation, many Australians will need additional support to rebuild their retirement savings. The government should consider a range of options to encourage such Australians to rebuild their superannuation balances, including a limited amnesty for those who accessed their superannuation in error and higher contribution limits for a limited period,” CPA Australia stated.
The accounting body explained the amnesty would allow individuals to put the amounts accessed early back into their superannuation savings without penalty.
With reference to its call for higher contribution limits, CPA Australia recommended the government relax some of the current restrictions imposed on people’s ability to deposit money into their retirement savings accounts for a short period of time.
Specifically, the industry organisation suggested the total super balance level that restricts individuals from carrying forward any unused component of their concessional contributions cap for a period of five years, currently set at $500,000, be lifted to allow more people to use this provision as an early release repair mechanism.
Further, the pre-budget submission included a request to include a government co-contribution scheme for people who used the coronavirus early superannuation access financial hardship measure.
CPA Australia also called on the government to safeguard the superannuation system from potential future misuse by formulating an accepted definition of retirement.
“It is important that our retirement income system be properly equipped to deal with what it is supposed to support; that is, retirement. An appropriate definition of retirement will assist in more careful consideration being given to whether the superannuation system should be accessed in times of crisis,” it said.
“A definition could also assist in the design of potentially more appropriate policies to help households respond to future shocks.”
Last week, the SMSF Association used its pre-budget submission for 2021/22 to call for the current superannuation system to be simplified.
