The Association of Superannuation Funds of Australia (ASFA) is calling on the federal government to focus on measures in the upcoming budget that will improve fairness for superannuation consumers, particularly those on lower incomes.
In its pre-budget submission, the industry body said that while the superannuation system has worked well on behalf of the 17 million Australians with super accounts, it has still identified the need for “minor tweaks”.
Namely, stability in policy and taxation settings are a focus, ASFA said, in addition to measures to improve fairness in the system, particularly for those with lower incomes or superannuation balances.
“Super builds our prosperity. It delivers greater financial security for retirees, stable capital for investment, and economic resilience for the country,” ASFA CEO Mary Delahunty said.
“The March 2025 budget will be an opportunity to build on the strengths of Australia’s compulsory superannuation system while boosting fairness and financial security in retirement for individuals on lower incomes, especially women.
“Importantly, these reforms would align with the recently legislated objective of superannuation, which enshrines the purpose of superannuation as to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
Key requests
Among ASFA’s key recommendations in its pre-budget submission was increasing the upper threshold for the Low Income Superannuation Tax Offset (LISTO) from $500 to $810 a year based on the current tax threshold.
Breaking this down, the industry body said that, as a result of changes to income tax brackets, individuals on incomes between $37,000 and $45,000 receive only a small tax concession in regard to their superannuation.
It also requested that the ATO be fully funded so that the agency may pursue employers that don’t pay the required superannuation guarantee contribution to their workers.
“The non-payment and underpayment of superannuation by employers risks the retirement income of millions of Australians – it’s equivalent to wage theft and has significant impacts on retirement outcomes,” Delahunty said.
Notably, ASFA additionally called for the government to expand super contributions to all employees who are under 18 and working less than 30 hours, saying that removing the exclusion would be removing a current inequity in the system.
It also pointed to the benefits from compound investment returns given the long period before retirement would be significant.
“The intent of not paying super to under-18s working less than 30 hours per week was to stop fees and insurance premiums from eroding low-balance accounts,” the CEO said.
“However, today there are strong protections applying to low-balance accounts, so continuing to exclude this group from SG contributions now lacks justification and disadvantages young people in the early stages of their working lives.”
Other recommendations also include sending more funding to ASIC for an information campaign on superannuation, focusing on the Moneysmart website, in addition to reviewing the treatment of superannuation payments owed by insolvent employers.
