Claims that the government’s superannuation proposals will “severely hamper” the ability of members to save are misinformed, according to research company Rice Warner.
Rice Warner says criticism of the government’s super proposals – to impose a $500,000 indexed lifetime cap on non-concessional contributions and to cut the annual cap on concessional contributions to a flat $25,000 – are misguided.
“There is much misinformed comment that two of the federal budget’s core superannuation proposals will significantly hamper the ability to save in super,” the firm said on its Insights blog.
“It has been stated that fund members who can afford to make large contributions will not be able to reach the new pension cap of $1.6 million.
“However, modelling by Rice Warner gives a different impression.”
Rice Warner’s modelling involved eight case studies of fund members aged 40 with an intention to retire at 67. Four are currently earning $100,000 a year, with the other four earning $250,000 a year.
It found that each of the fund members can save at least $1.6 million in super.
“Five of the eight fund members in the case study will reach at least $1.6 million without having to make any more non-concessional contributions,” Rice Warner said.
“Significantly, the remaining three will need to make only modest annual non-concessional contributions.”
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