Changes to Australia’s superannuation tax concessions and age pension are a step in the right direction towards a more sustainable retirement system, though the 2009 federal budget still disappointed many, according to the nation’s peak financial services bodies.
“The budget contains far reaching changes for age pensions, and more modest but challenging developments for superannuation,” Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds said.
“During the difficult economic times like we are now experiencing it’s only fair that the more generous benefits enjoyed by high income earners are re-balanced against the needs of Australia’s less well-off citizens.”
For the Association of Superannuation Funds of Australia (ASFA), the decision to increase the age pension from 2017 with an aim to settle it at 67 in 2023 was not an unusual announcement.
“This was certainly part of the Henry Review. However, this was not supported by ASFA – our view was that 65 should be the magic number,” ASFA chief executive Pauline Vamos told InvestorDaily.
The reduction in the concessional contributions tax would also impact Australians who wanted to play catch up at this time, Vamos said.
“We’re very pleased there has been a change to the co-contribution – it’s gone from 150 per cent to 100 per cent,” she said.
“However, it will go back to 150 per cent by 2014. So again that will impact women – mainly older women who are trying to play catch at this time … so we’ve got to understand that they will be suffering.”
For FPA chief executive Jo-Anne Bloch, the budget’s offerings for super were a little disappointing.
“In our budget submission we asked for consideration of improving superannuation through a variety of measures, but clearly this is not the time from a government point of view,” FPA chief executive Jo-Anne Bloch said.
“So we’re a little disappointed that superannuation is being used to fund some of the spending initiatives … but by the same token, we hope and trust that people continue to have faith in superannuation as a long-term retirement vehicle.”
For the Investment and Financial Services Association (IFSA), the budget has further delivered on the government’s commitment to developing Australia as a leading international financial services hub in the region.
However, IFSA was disappointed the budget reduced the salary sacrifice concessional contributions caps for older Australian workers, IFSA deputy chief executive John O’Shaughnessy said.
“Cutting the contribution caps so severely is a disappointing decision, primarily because a reduction in the contributions caps penalises older Australians who haven’t had the chance to accrue large super balances,” he said.
