The financial services firm has created a framework for lifetime concessional caps, which could be used to remove the current annual limit system of $25,000 in a given year.
“The reality is most Australians cannot afford additional super contributions of $25,000 for much of their working life and are therefore missing out if they leave the bulk of their super contributions to the latter part of their career, often when their disposable income is highest,” Mercer managing director and market leader for the Pacific David Anderson said.
“Lifetime limits would create a much fairer system; they would secure more adequate retirement incomes for more Australians, lessen the cost of the age pension to taxpayers, and allow people – particularly women – who have been in and out of the workforce to catch up in their retirement savings.”
Under Mercer’s framework, if an individual doesn’t use the current concessional cap of $25,000 in a given year, half of what is unused would be rolled over to the next year.
In addition, the concessional contribution in any year would not be able to exceed $75,000 in any given year.
“Concessional contribution caps provide a significant benefit in encouraging long-term saving for retirement, without the government having to provide excessive taxation concessions to the wealthy,” Mr Anderson said.
Mercer’s Superannuation Sentiment Index found that only 30 per cent of working Australians believe they will have enough savings to last beyond age 70.
Additional Mercer research found that Australia has the lowest contribution caps of the top nine retirement savings systems in the world.
Mr Anderson said creating lifetime superannuation concessional caps would help build consumer confidence in the super system.
“Lifetime concessional contribution caps would provide all Australians with an equal opportunity to build their nest egg when they’ve got the financial capacity to do so,” Mr Anderson said.
“We should simply begin now, it does not need to be retrospective.”
