The superannuation system is working well on behalf of Australians and only needs minor tweaks, according to the peak superannuation sector body’s pre-budget submission. 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, are identified.
ASFA – the voice of super – is calling on the Federal Government to focus on measures in the upcoming budget that will improve fairness for superannuation consumers, particularly those on lower incomes, through building on the stability and strength of Australia’s superannuation system as part of its pre-budget submission.
“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. Super builds our prosperity. It delivers greater financial security for retirees, stable capital for investment, and economic resilience for the country,” ASFA CEO Mary Delahunty said.
“The March 2025 Budget will be an opportunity to build on the strengths of Australia’s compulsory superannuation system while boosting fairness and financial security in retirement for individuals on lower incomes, especially women.
“If adopted, ASFA’s budget recommendations would lead to better retirement outcomes for Australians, particularly low- and middle-income earners,” Ms Delahunty said.
“Importantly, these reforms would align with the recently legislated objective of superannuation, which enshrines the purpose of superannuation as to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.”
ASFA’s key requests
- Increase the upper threshold for the Low Income Superannuation Tax Offset (LISTO)
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.
- Fully fund 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,” Ms Delahunty said.
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.
- More money to ASIC for an information campaign on superannuation, focusing on the Moneysmart website
“This would enable greater consumer awareness and knowledge in regard to superannuation and investment matters, which will also help consumers spot potential scams and mitigate risks for superannuation fund members and consumers more generally in areas such as cyber risks, fraud, and financial abuse,” Ms Delahunty said.
- Review 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.
“Compulsory superannuation contributions are part of an employee’s remuneration and are vital for achieving dignity and stability in retirement,” Ms Delahunty said.
- 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,” Ms Delahunty said.
Other recommendations in ASFA’s submission include:
- reducing the superannuation tax impact on individuals claiming hardship or compassionate release of superannuation
- facilitating one superannuation account for life
- taking steps to improve housing supply through greater institutional investment, and
- reducing the superannuation tax impact on those employed under the Pacific Australia Labour Mobility (PALM) scheme and facilitating transfer of superannuation to those employees.
Access ASFA’s full submission here.
For further information, please contact:
ASFA Media Manager Richard Garfield, 0451 949 300.
About the Association of Superannuation Funds of Australia (ASFA)
ASFA, the voice of super, has been operating since 1962 and is the peak policy, research and advocacy body for Australia’s superannuation industry. ASFA represents the APRA regulated superannuation industry with over 100 organisations as members from corporate, industry, retail and public sector funds, and service providers. We develop policy positions through collaboration with our diverse membership base and use our deep technical expertise and research capabilities to assist in advancing outcomes for Australians.
We unite the superannuation community, supporting our members with research, advocacy, education and collaboration to help Australians enjoy a dignified retirement. We promote effective practice and advocate for efficiency, sustainability and trust in our world-class retirement income system.
