A new report on the future of the Australian superannuation system has highlighted the significant impact the limit placed on concessional contributions will have on the growth of superannuation balances in the next 20 years.
"Our projections suggest that the limiting of the concessional contributions will actually have more of an effect on the size of the industry than increasing the compulsory contributions to 12 per cent," Deloitte partner Wayne Walker said at the launch of "Dynamics of the Australian Superannuation System: the next 20 years 2011-2030".
In light of this finding, Walker suggested the current limit of $25,000 needed to be reviewed.
"I think a lot of people would think if you're able to contribute $25,000 to superannuation, then you're a high net worth individual," he said.
"But $25,000 is not a lot of money if what you're doing is putting money into the system because you couldn't save for retirement at younger ages."
As such, he proposed that the contributions limits needed to be more sophisticated to make allowances for what people had been able to put into the superannuation system over a lifetime.
He suggested that might mean the government needed to look at parameters that allowed people to make larger contributions to their superannuation balance as they approached retirement.
And evidence suggests changes like this have are already being considered.
"The feedback I've received from the government on that catch-up idea is they're not necessarily anti it. It's how you administer it. This will fall with the ATO (Australian Taxation Office) and if the industry has got to come up with a model for that, it's got to be something that is simple enough that the ATO can administer," Deloitte Australia head of superannuation Russell Mason said.
These changes would in turn help address the problem of retirement savings adequacy, which would continue to be the major concern for Australians over the coming 20 years, Walker said.
