Federal government plans to expand the downsizer contribution scheme to people aged 60 and remove the work test for superannuation contributions have been welcomed as positive changes to the super system.
The Association of Superannuation Funds of Australia (ASFA) stated it supported the moves, announced ahead of the budget tomorrow night, as they will allow older Australians to contribute more to their super, which in turn will assist them to live with dignity in retirement.
“The reality is that the vast majority of Australians exhaust their savings in retirement and pass away with no superannuation,” ASFA noted, referring to research it recently released that found more than 80 per cent of people aged over 60 died with no remaining super.
The superannuation industry peak body said the expanded downsizer contribution scheme would increase the number of older people who could contribute more to super, while also boosting the supply of family homes in the property market.
ASFA deputy chief executive Glen McCrea said: “The removal of the work test for contributions will also increase flexibility for older Australians seeking to boost their superannuation savings.”
McCrea said the extension of the First Home Super Saver scheme, which will allow more voluntary contributions to super to be withdrawn for a first home deposit, was welcomed as it did not impact on the primary role of superannuation building retirement savings.
ASFA, however, called for more to be done to close the gap in retirement savings between women and men through the removal of the $450 a month threshold where super is not paid and by paying the superannuation guarantee (SG) on paid parental leave and increasing it to 12 per cent.
“It is crucial that the low-income superannuation tax rises to reflect tax rate changes and the system goes to 12 per cent so more Australians can have dignity in retirement, particularly younger Australians, given the dramatic ageing of the Australian population over the next three decades,” McCrea said.
