Fairfax Media reported last week that the government is opting to tighten the concessional contribution caps from $30,000 to $20,000 and is also looking at tightening the non-concessional caps.
SMSF Association chief executive Andrea Slattery said the government needs to rule out speculation that a lowering of the concessional contribution cap is being considered.
“Reducing the cap will critically undermine the superannuation system’s ability to give people the opportunity to save for a self-reliant, secure and dignified retirement,” said Ms Slattery.
“In particular, it is extremely relevant to people who have volatile incomes throughout their working lives, whether it be due to career breaks to raise children, broken working patterns, or because they own or work in businesses whose fortunes rise and fall with changing economic conditions.”
Ms Slattery said these groups of people need adequate caps to maximise their contributions when they have sufficient income in order for them to build their retirement savings throughout their working lives.
She also said there is also an intergenerational equity issue with reducing the cap to $20,000, as limiting the ability for people to make pre-tax contributions going forward unfairly affects Generations X and Y.
“This shifts the burden of superannuation changes that are driven by budget considerations onto future cohorts making their way towards retirement,” she said.
Ms Slattery said the mooted change in the contribution caps is another example of a public debate about fiscal issues rather than a long-term debate about our future savings.
“The super system encourages people to make long-term decisions to save for their retirement but short-term policy decisions driven by budget considerations damage people’s ability to make long-term savings plans,” she said.