In its submission for the 2019 federal budget, the association said the current concessional cap of $25,000 for all members was “restrictive” and limited individuals’ ability to save an adequate amount of super to be self-sufficient in retirement.
“The lack of a higher cap for older Australians fails to recognise that most people are able to make voluntary contributions to superannuation later in life when they have a greater financial capacity to do so,” the SMSFA said.
“Individuals traditionally make mortgage repayments and pay school fees and other immediate household expenses before considering the opportunity to build an adequate superannuation balance.”
The association referred to Rice Warner research showing that fund members contributed between $30,000 and $100,000 a year to super once they passed age 50, while those under 50 only contributed between $5,000 and $20,000 a year.
“The lead-up to retirement, beginning around age 50, is a critical time period for individuals to plan and grow their retirement savings,” the association said.
“These are the final years of full-time work and provide the greatest opportunity with an intersection of financial capability and proximity to retirement.”
Based on revenue estimates in the 2016-17 budget, the SMSFA estimated the cost of increasing the concessional contribution cap to $35,000 for those over 50 would be around $1 billion. However, the association suggested limiting this cap to those with under $500,000 in super, similarly to the recently introduced catch-up contribution measures.
“The superannuation system previously encompassed a dual contribution cap for individuals at age 50. The higher cap was then removed to prevent higher-income workers from contributing large amounts of pre-tax dollars into superannuation,” the association said.
“However, in the current superannuation system a return to dual contribution caps can now be effectively targeted through the use of the total superannuation balance measures.”
Using the example of a 50-year-old fund member with $300,000 in super, the SMSFA said if they were able to contribute $10,000 more a year until age 65, the individual would retire with $184,000 more in their super, assuming a 6 per cent annual return.
“This would encourage individuals to contribute to their superannuation and, in the long term, reduce the reliance on the age pension,” the association said.
C’mon SMSFA. The figure should be whatever they can or want to contribute to their SMSF provided the total value of the SMSF does not exceed a certain figure, be that $5m, $10m or whatever. That will prevent the very rich from getting endless tax benefits, like the trustees with $50m+ in super. I’m 67 with a small super balance but even if $35,000 is the limit I will not get much in the next 3 years. Ridiculous!
I would argue that lower interest rates have had the biggest impact on increasing property prices.
People can borrow more so they can in their eyes spend more on a property.
Negative gearing doesn’t have anywhere near as much of an impact, and whilst they might be saving on income tax, they are still running at a loss (to incur the negative gearing), they also pay tax via stamp duty and CGT (inflated more by all the depreciation they have claimed).
But alas this is not at all related to the topic at hand
It’s not “negative gearing” that’s the problem. It’s the failure to rate land values so landholders pay for utilities, roads etc. The more land is levied the lower its market price and more burdens can be taken off working families.
Superannaution should be just a method of lifetime income spreading for earnings. Unlimited deductions from personal exertion income with no tax on contributions or earnings and taxable only when drawn with all drawings treated as a pension.
It needs to be much higher than that, $100,000 and there needs to an allowance to make contributions up to and including age 75, not 70. Let’s face facts, Libs/Nats don’t like super unless it is their own taxpayer-funded super and will do anything to frustrate us, mere mortals, from making larger contributions. If Scott Morrison and his ilk think God will provide then they have a serious case of “head up bum” disease. This is why they don’t do anything about negative gearing, they are all up to their eyeballs in it. Take The soon to come home US Ambassador, the Hockey Family and related family trusts have many, many properties through negative gearing, he has paid very little if any tax because of this and this is why young Australians cannot get a house to get started they have become victims of the vicious “Renter Class” and this needs to stop. Negative gearing has artificially inflated the value of homes. Personally I hope I live to see the largest property crash in Australian history the same as the1980 crash, only then will people wake up to this folly, incidentally I do not support Labour’s stand on either super of negative gearing.