Measures to boost private savings through increased contributions to super were proposed by ASFA (The Association of Superannuation Funds of Australia) in its pre-Budget submission released today.

“Increases in private savings are an acknowledged anti-inflation mechanism,” said Pauline Vamos, the CEO of ASFA. “The Prime Minister has indicated that a key part of the Government’s five point plan of action is to foster a culture of savings, and ASFA’s Pre-Budget submission ties in closely with this proposal.”

“Our recommendations would help take pressure off inflation, assist people to save for the future and help lift national savings. ASFA agrees with Mr Rudd that more needs to be done to build a national savings culture in Australia,” she continued.

ASFA’s recommendations include: 

• Introducing ‘soft compulsion’ on employee contributions to super
  Encouraging or requiring employers to help employees contribute an additional 1 per cent of salary or wages into super each time they receive a wage increase or start a new job, up to a maximum of 3 per cent. The ASFA recommendation is that it is a default arrangement that employees can opt out of if they wish, mirroring similar approaches in the USA, the UK and New Zealand. 
• Making the super co-contribution available to more people
  The raising of the co-contribution income threshold so that more individuals in the lower / middle income group can qualify to receive the full co-contribution. It would be available in-full to those earning up to $40,000 per year and be phased out through to $60,000 per annum. 
• Changing the law so that salary sacrifice arrangements are available to all employees, on request
  ANOP conducted research, commissioned by ASFA in September 2007, shows that around one in four employees were either denied the opportunity to make salary sacrifice contributions to super by their employer or did not know that they could. Those that cannot salary sacrifice to super are disadvantaged as they miss out on the associated tax benefits.