The Association of Superannuation Funds of Australia (ASFA) has called on the Federal Government to extend the superannuation co-contribution regime so that it better accommodates middle income earners.
In a pre-Budget submission filed with Treasury in late January, ASFA suggests that the parameters of the superannuation co-contribution be changed from 2005-06 onwards so that it is extended to incomes of up to $60,000 a year “and that the phase-out rate for the co-contribution be adjusted so as to provide a greater incentive for middle income earners in particular”.
ASFA has also sought a significant change with respect to the superannuation surcharge, arguing in its submission that once an individual reaches their qualifying age for the age pension, they should be entitled to apply for a refund of their surcharge payments if their total superannuation benefit is less than the tax-free threshold.
The submission also seeks to extend the applicability of the superannuation guarantee to casuals and low income earners, asking that the $450 a month earnings threshold be abolished.
In backing up its submissions, ASFA pointed to public opinion research it commissioned which “consistently indicated there was a very high level of support in the community for greater self-reliance in retirement, provided the responsibility is shared with government through more incentives to save for retirement”.
It also said that its proposal to extend the superannuation co-contribution represented support for the process of mutual obligation.
“The co-contribution is already a very useful supplement to retirement savings and an incentive for additional savings by low to middle income earners, but ASFA considers it should be enhanced so as to provide greater incentives for both low and middle income earners,” the submission said.
“The current co-contribution mainly benefits low income earners, while the surcharge reduction currently being phased in will benefit upper income earners,” it said.
“There is both need and scope to provide greater assistance to individuals with a taxable income between $40,000 and $60,000 a year.”
