The Association of Superannuation Funds of Australia (ASFA) said in its pre-budget submission that stability in policy and taxation settings are a focus, though important measures to improve fairness in the system, particularly for those with lower incomes or superannuation balances, need to be identified.
It made a number of key requests to the government including increasing the upper threshold for the low-income superannuation tax-offset.
The submission stated that a cornerstone of ASFA’s push for greater fairness is its recommendation to provide a more appropriate tax incentive for low-income earners, and for the upper threshold of the LISTO to be increased from $500 to $810 a year based on the current tax threshold.
Currently, 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, a concession that is less than applies to those with incomes below or above that income bracket.
Additionally, ASFA urged the government to consider fully funding the ATO to pursue employers who 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,” said ASFA CEO Mary Delahunty.
“While the introduction of Payday Super next year, which ASFA campaigned strongly for, will make it easier for employees to keep track of their payments, and harder for ongoing under-payment or non-payment to occur, ASFA says the problem of non-payment of superannuation should also be addressed by the government providing additional support to the ATO so they can undertake greater compliance activity.”
Furthermore, it asked for a review of the treatment of superannuation payments owed by insolvent employers.
“ASFA recommends unpaid Superannuation Guarantee entitlements when an employer becomes insolvent be included in the definition of unpaid ‘employment entitlements’ for the purposes of the Fair Entitlements Guarantee,” Delahunty said.
“Compulsory superannuation contributions are part of an employee’s remuneration and are vital for achieving dignity and stability in retirement.”
Another of ASFA’s key recommendations was expanding superannuation contributions to all employees under 18.
ASFA argues that removing the exclusion from compulsory superannuation of those aged under 18 and working less than 30 hours a week would remove a current inequity in the system, and 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. 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,” Delahunty said.
“It’s important to acknowledge that the superannuation system is working well on behalf of the 17 million Australians with superannuation accounts, and delivering strong retirement outcomes for millions of Australians. If adopted, ASFA’s budget recommendations would lead to better retirement outcomes for Australians, particularly low- and middle-income earners.”
