The government's one-off doubling of the co-contribution payment is a crazy grab for votes as it will only affect five per cent of the population, a financial planning technical consultant said yesterday.
"In an election year, the government conjures up a $1,070 million spending spree on a group representing five per cent of the population who made a personal contribution to superannuation in 2005/06," Midwinter Financial Services general manager of strategy, Matthew Esler said
"Yet the list of more significant superannuation policy alternatives and incentives is seemingly endless. The incentive is just a crazy grab for votes in an election year," he said.
"Policies to encourage younger people to save for their retirement would help in tackling the major issue of inadequate retirement savings."
The superannuation guarantee rate of 9 per cent could be lifted by allowing this group to make tax deductible contributions, Esler said.
Currently the self employed can make a full tax deduction into their superannuation.
"This initiative should be extended to employees. Allowing people to divert their extra cash into superannuation, instead of an agribusiness investment, would be a more sustainable policy initiative and would also encourage young people to save," Esler said.
Widening the income threshold at which the full superannuation co-contribution could be received was, according to Esler, another suitable policy initiative.
Last week the Association of Superannuation Funds of Australia urged superannuation funds to be clear in their communications to members that the one off co-contribution measure only applied to those who made contributions during 2005/06.
