Australia’s superannuation contribution cap is unlikely to rise until at least 2014 following the federal government’s commitment to return the budget to surplus in 2012/13, an industry executive has said.
Strategy Steps director Louise Biti said measures announced in the government’s mid-year budget on Tuesday would mean the rise woould not happen until 1 July 2014.
Biti said one measure announced in the Mid-Year Economic and Fiscal Outlook was for indexation of the caps to pause for one year in 2013/14.
“This measure means that there is less ability for people to add to their super and grow their retirement savings,” she said.
She said the co-contribution was also becoming less important from 1 July 2012.
“It is disappointing that the cut-out to be eligible for the co-contribution has been reduced to adjusted taxable income of $46,920 and the co-contribution matching rate will be reduced from 100 per cent to 50 per cent with a maximum co-contribution of $500,” she said.
“Investors who have adjusted taxable income below $61,920 this year should be encouraged to take advantage of the more generous rules that currently apply.”
She said the government recognised the impact of the ongoing volatility in markets on retirees and had extended the reduction of the minimum payments from account-based pensions.
The standard minimum payment factors will continue to be reduced by 25 per cent throughout 2012/13.
“Investors who can afford to take lower levels of income from their account-based pension can benefit from the lower minimum pension requirement,” Biti said.
Opposition assistant treasury spokesman Mathias Cormann also weighed into the debate by stating Australians saving for their retirement would effectively pay for the Labor government’s “waste and mismanagement” over the past four years.
“[Financial Services and Superannuation Minister] Bill Shorten and Labor continue to punish those Australians who are prepared to take responsibility for their own retirement needs,” Cormann said.
“By pausing indexation of concessional contribution caps, Labor is again reducing the incentive for people to save more because the caps are not keeping pace with inflation and wage increases.”
He said if Labor had managed Australia’s economy properly it would have no need to attack people who were trying to provide for their own retirement by making additional contributions to their superannuation.
“It is absurd that on one hand Labor wants to force people to contribute more in compulsory super, while on the other hand they are removing incentives for people to make additional voluntary super contributions,” he said.
