Under current law, the superannuation guarantee contribution is 9 percent. From 1 July 2013 it will rise to 9.25 percent; and thereafter in various increments to 12 percent. Even at 12 percent, there is considerable literature, including various Treasury Intergenerational Reports, to suggest that our retirement incomes will be inadequate as Australians live longer.
In justifying the deferral, the Opposition points to the 'cost' of the concession, being the difference between the 15 percent tax rate on the increased contribution versus the taxpayer’s marginal rate of tax. Of course it is important to factor in the real cost to future governments of an inadequate retirement savings pool and to consider the benefit that compulsory super provides Australia. We currently enjoy the 4th largest level of funds under management in the world, due in part to our system of compulsory super.
Interestingly, on 15 May 2013, ASFA released a White Paper titled Super system evolution: Achieving consensus through a shared vision. In this paper, ASFA calls for an informed conversation about whether our superannuation system should be evolved or adjusted in light of the demographic and economic changes within Australia.
If you wish to discuss these issues further, please contact a member of our national superannuation tax practice.