The Association of Superannuation Funds of Australia (ASFA) has reiterated calls for a parliamentary inquiry into tax efficient investments in its pre-budget submission.
This needs to ensure changes in taxation don't lead to behavioural changes that negate increases in government revenue, ASFA stated.
Any move from superannuation investing means a move away from a diversified investment approach in a highly regulated environment. "Superannuation is an efficient allocator of capital to productive needs in the economy. Superannuation is not about short-term collections of tax, it's about addressing a long-term, demographic time bomb," ASFA stated.
The association also played down concerns that too many concessions flow to people in the top income bracket since the introduction of concessional caps, with the age pension also increasing the equity of the system.
"In reality, nearly 90 per cent of the tax concessions for superannuation flow to individuals on less than the top marginal tax rate," ASFA said.
ASFA requested that the low-income tax rebate be maintained, and supported the capping of concessional tax treatment of superannuation consistent with "what might be reasonably needed for retirement income purposes."
ASFA also said super tax concessions should not extend to account balances which are being primarily used for estate planning.
Based in its own internal analysis, ASFA said that additional taxation for individuals with super account balances over $1 million is inappropriate given a 65 to 74-year old taking the minimum drawdown from their account-based income stream would require $1.13 million in their account.
If there were to be a cap on superannuation individual entitlements attracting tax concessions, the figure should be around $2.5 million and indexed to average weekly ordinary time earnings (AWOTE), ASFA said.
ASFA also urged the government to address the structure of retirement income products and longevity risk due to the imminent retirement of the baby boomer demographic.
ASFA outlined a number of recommendations it said would help remove impediments to the financial services industry developing better retirement products, including amendments to the Superannuation Industry (Supervision) Act and the Centrelink means test.
The submission also called for the government to include funding for a superannuation consumer council, which ASFA said would, over time, receive "significant financial support from the industry that would ensure it would not require ongoing funding."
