Further superannuation changes will be a disaster: ASFA

The Government should immediately drop plans to make any further changes to the superannuation system, the peak body for the industry warned today.

The Association of Superannuation Funds of Australia (ASFA) said that the constant tinkering and speculation on the settings around superannuation were undermining confidence in the system.

“This treatment of the industry as a ‘honey pot’ which can be dipped into whenever the Government is looking for money, must stop,” said ASFA CEO Pauline Vamos.

“We have a compulsory superannuation system that is relatively young – 20 years old this year – and yet the goal posts are always shifting.

“Our research shows one of the biggest frustrations with super and one of the reasons people are reluctant to commit to saving more for their retirement, is the constant change.

“To proceed with the kinds of tax changes that have been leaked today as under consideration, would be bad for women, those close to retirement and self-employed workers who we are trying to encourage to save for their retirement.

“In effect, it would be the Government mortgaging this country’s future and undermining the good work they have done to reform the system.

“It will mean more Australians will have less in retirement and a greater burden will be placed on the public purse through the Age Pension.

“We are already facing an ageing population with insufficient savings for retirement – and we are living longer.

“Removing incentives to save more through superannuation will have a snowball effect which will mean: reduced voluntary contributions, less money invested in the Australian economy through the diverse holdings of the super pool and a much bigger burden on the taxpayer down the track.

“The retirement incomes system in Australia is based on three pillars: compulsory contributions, voluntary savings and the Age Pension. By removing the existing tax concessions, those voluntary savings will result in less revenue for the Government as discretionary funds move into less productive investments such as negative gearing of both residential property and shares, or even into discretionary family trusts.

“Over the past year the Government has already reduced concessions available within superannuation by halving the co-contribution, pausing the indexation of concessional caps and placing restrictions on the contributions those over 50 can make.

“The perception that the tax concessions unfairly favour the wealthy is demonstrably wrong.

“The tighter contribution caps (on the amount of super contributions attracting the concessional tax rate) and other factors have seen the level of tax concessions flowing to the top income earners drop considerably since 2005.

“In 2009-10 around 90 per cent of employer contributions related to individuals on less than the top marginal tax rate, with over 50 per cent of contributions relating to individuals on a marginal income tax rate of 30 per cent or less.

“The bulk of tax concessions on super flowed to the majority of Australian employees who are on marginal tax rates of 30 and 38 per cent.

“The superannuation system already pays more than $10 billion in taxes every year and helps drive the Australian economy through diverse investment including in Australian companies and infrastructure.”

For media inquiries, please contact:

Pauline Vamos, CEO, 0433 169 342

Rebecca Glenn, GM Marketing and Communications, 0416 170 439

Megan McDougall, Media and Communications Coordinator, (02) 8079 0849

About ASFA – the voice of super

The Association of Superannuation Funds of Australia is the peak industry body representing the superannuation and retirement industry. ASFA is the only organisation that represents all types of superannuation funds (retail, industry, corporate and public sector) and associated service providers. ASFA members manage or advise on the bulk of the $1.3 trillion in superannuation assets as at September 2011. Its members represent over 90 per cent of the approximately 12 million Australians with superannuation.