The government should tailor superannuation concessions to workers nearest retirement and view younger workers as the least engaged with their retirement savings, the Institute of Public Accountants (IPA) said yesterday.
The IPA said a super framework focused on demographics better reflected the attitudes of working Australians towards their super than a one-size-fits-all approach to retirement savings.
"A preferred system may be one that closely matches the level of taxpayer engagement at different age points," IPA chief executive Andrew Conway said.
"Superannuation policy generally treats people as either saving for retirement or in or transitioning to retirement.
"A person starting out their career does not have the same level of engagement with superannuation as a baby boomer looking at retiring over the coming years."
The IPA urged the government to regard people aged 40 and under as "disengaged".
"The main issue is how to encourage young people to become interested in superannuation when there are more immediate and important priorities, like saving for a house, starting a family, education or travel," the IPA said in its Pre-Budget Submission 2012-13.
It said it broadly supported the increase of the superannuation guarantee (SG) to 12 per cent, but preferred the introduction of what it called a soft-compulsion system.
"This would allow people on lower incomes to opt out of the increase in SG and maintain their level of income, while ensuring the majority are able to benefit in the long run from increased superannuation balances," it said in its submission.
Workers between the ages of 40 and 50 were 'partially engaged' and should not be able to opt out of the system, it said.
The fully engaged were those over 50, it said.
"Usually those aged over 50 are more engaged with greater capacity and need to contribute to their superannuation. Many in this demographic may not have had the benefit of lifetime superannuation and therefore need to make up for those years. As this group will have less time to earn income, they should be granted the widest possible concessions to make contributions," it said.
The annual concession contribution cap for those between the ages of 50 and 60 should be $50,000, rising to $75,000 a year for those over 60.
"Any annual contributions above this amount would be taxed at the individual's personal tax rate, but would not be subject to the excess contribution tax regime," the IPA said.
