Australian superannuation and advice heavyweights have called on the Labor government to stop tinkering with the country's superannuation system and resist making further significant changes to the sector in tonight's federal budget.

Mercer senior partner Dr David Knox said Australia's super sector deserved stability from Treasurer Wayne Swan and the government, particularly in light of the major reform process underway.

Knox said the industry was experiencing its own challenges with Stronger Super, the introduction of MySuper, SuperStream, the Australian Prudential Regulation Authority's prudential standards as well as the government's Future of Financial Advice reforms.

"That is a lot for the industry to take on board in the next 12 to 18 months and we were hoping that there would be no change because not only is there a lot of reform processes happening, but people need to have confidence in super," he told InvestorDaily.

Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds said the association had a "long list of measures" that it would like to see put in place, though it recognised the budget would be tight.

"In the context of a tight budget, the best we can hope for is little change as we know that constant tinkering with the system undermines confidence," Reynolds said.

Association of Superannuation Funds of Australia chief executive Pauline Vamos said the association had a number of key measures it believed the government should consider.

The first measure centres on changes to the Superannuation Industry (Supervision) Act 1993 and tax rulings.

"We [also] want to see the beginnings of the self-employed being part of the super system," Vamos said.     "We want certainty around co-contribution caps for the next few years so people can actually plan ... no other changes to the system. Let's embed the changes we have already."

FPA chief executive Mark Rantall said one of the key areas of change the government could afford Australia's financial planning industry was the continued push for tax deductibility of planning fees for an initial plan.

"We'd also call on the government to resist the temptation that successive governments have had to tinker with super. Having stability in superannuation is critical to consumer confidence in their investment," Rantall said.

Government leaks
Earlier this month, the industry was confronted with news the Labor government intended to make dramatic changes to superannuation, including extra tax on those who earn more than $300,000.

"We're hopeful that the leaks aren't true," Rantall said.

"However, we understand the budget dynamics and turning a deficit into surplus. No doubt the government will leave no stone unturned."

Knox said such a move was "tinkering for the sake of a very small amount of money".  

"We've got to realise that all this tinkering means there will be additional costs, additional inefficiencies," he said.  

Towers Watson Australia managing director Andrew Boal said the increased tax for those who earned more than $300,000 would not only affect high-income earners.  

"As foreshadowed, this move does not improve the simplicity of consistency of tax concessions on super contributions," Boal said.  

He argued surveys in the Australian superannuation industry had found fund members already thought super was complex and difficult.  
"Perception is reality and this move will exacerbate the situation - even for members who won't be affected by the new tax," he said.  

The budget measure would see six different effective rates of concessional tax treatment applying to various income ranges.  

Boal said that would introduce greater complexity into the system and create an administrative nightmare for funds.  

"[The] administration of any new tax should fall to the Australian Taxation Office (ATO) rather than be implemented by individual funds," he said.  

Reynolds said while the AIST was aware changes were afoot for high-income earners, there had also been some talk of changes affecting Australians over 50 years of age.

She said the AIST would be disappointed if the proposal to link the over-50s $50,000 concession to those with less than $500,000 in super was put on hold or dumped in the 'too-hard' basket.

"If the ATO is able to deal with the administration of the new rules affecting those with earnings above $300,000, we see no reason why it can't also deal with these measures," she said.

The changes to super concessions for those on incomes of $300,000 would only hit a small number of high-income earners, while lowering the over-50s cap to $25,000 potentially affected a lot more people, including middle-income earners, she said.

"Parts of the industry have been arguing for a one-size-fits-all $35,000 cap and while that's preferable than a blanket $25,000 cap, we would prefer to see a more targeted measure that benefits those over 50 who don't have enough super to retire comfortably," she said.

Rantall said the FPA's hope for this year's budget was for the contribution cap to be maintained at its current level.

Knox said there needed to be recognition that Australians over 50 probably had more capacity to save and so tinkering with the caps created further uncertainty.

"The government's announcement of the $50,000 for the over 50s as long as they have less than $500,000 in super is an administrative nightmare," he said.

"And that is going to add costs into the whole industry operations, which all members are going to have to bare."