Speaking at the media launch of Deloitte’s Adequacy and the Australian Superannuation System report yesterday, Deloitte’s superannuation partner Russell Mason said the government should encourage higher contributions into super and assess the merits of lifetime contribution limits as opposed to year-to-year limits.
“There have been many different regimes for limiting tax-deductible superannuation contributions in the past which have created uncertainty, inequity and discouraged retirement savings,” Mr Mason said.
“The limits are now assessed year by year, with no scope for clawback to compensate for periods out of the workforce – continuing to create the gender divide – or for different lifecycle stages.
“There is limited and inadequate scope to top up super in the years approaching retirement to finance a comfortable lifestyle.”
Deloitte said the government should also facilitate access to deferred and lifetime annuities, which it says "will not happen on a wide scale without government action".
Mr Mason also said the broader superannuation industry should examine the factors that drive investors to consider SMSFs.
“If funds want to compete with SMSFs, instead of what this industry so often does – which is criticise them – we should be looking at the SMSF and thinking how can we replicate that in the wholesale and retail industries,” Mr Mason said.
Mr Mason added that the industry can expect more “SMSF lookalike” products as software systems continue to evolve.
The Deloitte report also highlighted that superannuation will not provide adequate support in retirement for most Australians unless they work longer or contribute more to their super.
“The system in its current form will not deliver adequacy. It must change. From government we need policy settings that build trust, foster greater efficiency and competition, and sensibly apply concessions across the working lifetime of individuals,” said special superannuation adviser at Deloitte Wayne Walker.
To finance a comfortable retirement, Deloitte calculates each person would need to contribute an extra 5.5 per cent to 7.5 per cent of salary to superannuation each year of their working life, in addition to the 12 per cent superannuation guarantee.