The Government 2016 Budget changes to superannuation may have missed the mark in terms of reducing the cost of superannuation tax concessions to the public purse, according to new analysis from KPMG.
The KPMG analysis has pointed to the fact that the superannuation changes, including the $1.6 million cap and reductions to concessional caps, did not appear to have resulted in significant changes to Treasury’s calculations for the present and projected level of superannuation tax expenditures.
It said that, instead, the Treasury had calculated the cost of the superannuation tax concessions to rise by nearly 40 per cent in three years – from $36 billion to $50 billion by 2021 – higher growth than was projected when the 2016 Budget changes were introduced.
“Intriguingly, this growth in the cost to Government has actually happened after the imposition of those caps,” the KPMG analysis said. “This is driven mainly by the earnings concession, which is highly dependent on Treasury’s assumed rate of return within funds. It may therefore be inferred that Treasury has significantly revised upwards the rate of returns in the future.”
Amid a challenging market environment, three super fund CIOs have warned against ‘jumping at shadows’.
The professional body is calling for the annual performance test to transition to a two-metric test, so it better aligns with the overarching duty of super fund trustees to act in the best financial interests of their members.
AustralianSuper, Rest, and HESTA agree on the need to retain and enhance the test, yet they differ in their perspectives on the specific areas that warrant further refinement.
Australia’s second-largest super fund has confirmed it is expanding its presence in the UK following significant investment in the region.
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