Superannuation funds will miss out on $8.5 billion in contributions as a result of the government's decision to delay the increase in the concessional caps for over-50s with super balances of less than $500,000.
"The government has estimated that this saving is worth $1.46 billion over two years, which equates to approximately $8.5 billion less in savings for retiring Australians," Deloitte partner Russell Mason said in reaction to the measure announced in Tuesday's budget.
"This is a significant loss of superannuation savings for those approaching retirement."
The government has sought to justify the deferral of the increase on the back of its SuperStream measures.
"Deferring the start date of the higher cap to 1 July 2014 will bring significant synergies and efficiencies, as it will allow implementation to occur in conjunction with changes to superannuation fund reporting and systems that will be occurring under the SuperStream reforms," Financial Services and Superannuation Minister Bill Shorten said.
"In addition, individuals will be able to more easily determine whether they are eligible for the higher cap from 1 July 2014, as the ATO (Australian Taxation Office) is developing an online reporting facility that will provide access to comprehensive account balance information from early 2014."
The Australian Institute of Superannuation Trustees (AIST) was somewhat sceptical about the government's reasoning.
"If the ATO was able to calculate all the new changes to the concessional rates that have occurred over the years, then they would be able to do this," AIST chief executive Fiona Reynolds said.
"We are disappointed, but we are also glad to see that it is only delayed rather than off the agenda altogether."
The Association of Superannuation Funds of Australia (ASFA) was less forgiving and demanded a parliamentary inquiry into the tax treatment of superannuation contributions, establishing a clear and permanent policy once and for all.
"A parliamentary inquiry would get all political sides together to develop a unified, long-term approach to retirement incomes and their tax settings, going forward," ASFA chief executive Pauline Vamos said.
Vamos was particularly displeased with the higher tax rates for people with an income of $300,000 or more, which will move from 15 per cent to 30 per cent in July.
"Superannuation is not about short-term collections of tax, it's about addressing a long-term, demographic time bomb," she said.
"This decision to increase the super contributions tax by the government looks shortsighted: there has been no consultation on this issue and no holistic review of taxation investment incentives.
"ASFA believes an inquiry is needed to understand the interactions between different investments and, in particular, how incentives in one investment area can impact on investment decisions across other investments."
Treasury did not respond to questions about the call for an inquiry.
REST Industry Super said the tax hike on the super contributions of wealthy Australians might have the unintended consequence of imposing higher costs on low-income earners.
"While only a very small number of everyday Australians will be directly affected by the contribution tax increase, the costs involved in making any changes to the administration system will be levied on the entire industry and not just the high earners it is targeting," REST chief executive Damian Hill said.
Implementation of the change was critical, Hill said, and the government should take heed of the super surcharge introduced in 1996, which was such an inefficient tax that it cost some funds more to administer than was collected through the rise.
"Without proper consultation, this further tinkering to the system could potentially cost the industry," he said.
