The Government must ensure superannuation tax concessions are channelled into building retirement income for Australians who need it, rather than propping up the wealth of those with adequate savings, the Association of Superannuation Funds of Australia (ASFA) says.
“While tax concessions are a very important feature of our superannuation system, once people have accumulated more than enough money to fund a comfortable lifestyle in retirement, they no longer require government assistance,” ASFA’s CEO Pauline Vamos said.
She said there are a number of policy levers that could be pulled to further promote the equity of the superannuation tax system, including applying a lifetime cap to non-concessional contributions and removing concessional tax treatment for those with balances over $2.5 million.
“This would help ensure that people are using superannuation as a means to provide enough income for a comfortable retirement, and not for wealth accumulation or estate planning purposes,” says Ms Vamos.
However, Vamos said it was heartening to find that most superannuation tax concessions flow to middle-income earning Australians.
ASFA’s data showed 75 per cent of the concessions in fact went to those paying the 30 per cent or 38 per cent marginal tax rate.
“This provides evidence that the contribution caps, which have been lowered substantially over the past few years, are working to reduce the concessional contributions made by upper-income earners, while continuing to provide support to the majority of Australians to help them save for their retirement.”
