The federal government should adopt an objective for the wider retirement system, including superannuation, and then commission a review into all current retirement-related tax and transfer payments policies to deal with an ageing population, according to a major accounting body.
In its pre-budget submission, Chartered Accountants Australia and New Zealand (CAANZ) made the call for the government to legislate an objective for the retirement system, covering superannuation, aged care, the aged pension and other government transfer payments, adding the “objective needs to be drafted from an individual’s perspective rather than from the government’s point of view”.
“For many years now, political leadership has been lacking an overarching vision for the ideal Australian retirement system. Instead, piecemeal changes have been made adding further complexity and inequitable or distortionary outcomes,” CAANZ stated in the submission.
“Before any fundamental changes can be made to the retirement income system, and after the retirement system objective has been legislated, the government should ask the Productivity Commission to comprehensively review all current retirement-related tax and transfer payments policies, including aged-care subsidies.
“The current policy settings are complicated and are often developed without adequate consideration of flow-on impacts on market participants, especially individuals.
“It is highly unlikely that individuals can successfully navigate their way around the superannuation, social services and aged-care environments without some form of professional assistance. A broad review of all related policy settings is urgently required.”
In regards to a review, the submission stated the Productivity Commission should examine the benefit of moving from annual superannuation contribution caps to lifetime caps, which would benefit those who cannot make regular contributions over their working life, such as women who may stop work to care for children.
The submission also suggested the commission examine allowing those under 35 to opt out of the superannuation guarantee (SG) regime and use unpaid contributions or amounts currently saved in super to purchase their first home, and also allow those earning more than $250,000 a year to opt out of the SG system.
Additionally, CAANZ stated a review should consider the “merits of adjusting superannuation tax concessions, particularly the maximum amount that an individual may have in an account, the transfer balance cap system and the tax-free status of pensioner accounts”, while also considering how superannuation tax concessions, aged-care assistance and age pension laws can be adjusted to work more in concert with each other.
