The Australian Institute of Superannuation Trustees (AIST) has scored Labor ahead of the Coalition in terms of superannuation policy, in a pre-election score card.
AIST says that Labor’s policies will “more positive impact on superannuation and the retirement outcomes for most working Australians”.
Labor superannuation policies
AIST supports six out of the seven Labor policies on the score card:
- Improving women’s superannuation outcomes – including phasing out the $450 monthly Super Guarantee threshold, paying super on Paid Parental Leave and considering targeting government contributions for low income earners
- Increasing the Super Guarantee rate to 12% ‘as soon as practicable”
- Including super in the national minimum employment standards
- Reducing the annual non-concessional contributions cap to $75,000
- Reducing the high-income super contribution (Division 293) threshold to $200,000
- Stopping refunds of excess franking credits
Labor’s platform has it increasing the Super Guarantee rate ‘as soon as practical’, but recent statements by the Shadow Treasurer Chris Bowen indicate Labor is sticking with the timetable legislated by the Coalition.
AIST has “reservations” about Labor’s policy to stop catch-up concessional contributions and reverse tax deductability of personal super contributions.
“Removing the $450 monthly threshold is a much-needed step towards universal super coverage while paying super on government paid parental leave will improve outcomes for many working mothers. Reducing tax concessions for high income earners improves the equity and sustainability of our retirement incomes system,” AIST said.
“Overall, this package of reforms goes further to bring greater fairness and sustainability to the super system than the Coalition’s policies.”
Coalition superannuation policies
Of the four Coalition superannuation policies on the score card, AIST supports one, has reservations about another and doesn’t support two:
- Guaranteeing no new taxes on superannuation
- Continuing SMSF borrowing
Banning SMSF borrowing through Limited Recourse Borrowing Arrangements (LRBAs) is a Labor policy. Labor also promised no new taxes on superannuation, beyond what was already announced.
AIST supports the policy of making tax relief for merging super funds permanent. AIST has reservations about the Coalition’s changes to super rules for older people from the latest Budget – increasing the age limits for the work-test rule, catch-up contributions and spouse contributions.
“The Coalition’s policy platform lacks substantive reforms and will do very little to improve equity in the super system or long-term sustainability. The policies below will largely benefit those with the means to make large voluntary contributions,” AIST said.
Labor would “improve fairness and sustainability” of retirement system
AIST CEO Eva Scheerlinck said Labor’s policies would “improve the fairness and sustainability of Australia’s retirement income system”.
“Key Coalition superannuation policies were more limited and would largely benefit wealthier individuals with the means to make voluntary contributions.”
“The nation’s ageing population, changing work conditions, the gender pay gap and falling levels of home ownership are among the key issues that need to be considered in developing appropriate superannuation and retirement policies,” Scheerlinck said.
“Good superannuation policy needs to be firmly focused on the long-term, with the aim to ensure that all genders and generations get a fair deal. This includes the young and old, those working full-time as well as those working part-time, and those taking time out of the workforce to care for family members, which is the situation for many women in our community.”
AIST in particularly has welcomed Labor’s policy to phase out the $450 monthly income threshold to receive Super Guarantee contributions – which applies per-job.
“If Labor is elected, we look forward to it going further to address the gender super gap by introducing a mechanism that targets those most in need with additional super contributions,” Scheerlinck said.
AIST represents what it calls the “profit-to-member” superannuation sector. Its members include industry and corporate super funds.