May 2014 Issue 93

Super body advocates 12 per cent

B2B Editor1 May 2015

There is emerging discussion that superannuation tax concessions need to be more efficient and better targeted to deliver a sustainable super system.

The Federal Labor Opposition in April highlighted the growing discussion around the need to put super tax concessions on a fairer footing.

Tax concessions on earnings for retirees are growing at more than twice the rate of the age pension.

It has been argued that there must be recognition of the compulsory nature of super and the need to ensure all Australians whether on low, middle or higher incomes continue to be incentivised to save for retirement.

Further debate has underlined that changes made to the current system be measured and objective-driven, and they should acknowledge interactions with the personal tax system and age pension.

Industry Super Australia (ISA) says that savings made from changes to super taxation settings should be reinvested in the super system in the form of retaining the Low Income Super Contribution (LISC) or equivalent measure, and accelerating the increases in the super guarantee to 12 per cent.

ISA believes these proposals will bring certainty for investors and ensure the system delivers for working Australians.

Nonetheless, benefits paid from the super system to members are now double the cost of the aged pension and are estimated to have reduced pension costs by 5 to 6 billion dollars per annum.