Industry response to the 2014 Budget has been mixed, with support for changes allowing withdrawal of excess non-concessional contributions and providing certainty for the increase of the Superannuation Guarantee to 9.5% from 1 July 2014. However the response has been broadly negative to the slowing of the SG rate beyond that which was contained in the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013.
Industry Super Australia says the changes in the budget will “result in a 25 percent reduction in total retirement incomes for someone aged 45 today on average earnings”, and instead proposes revisiting the recommendations of the Henry Tax Review.
SPAA congratulates the government for allowing excess non-concessional contributions to be refunded, with tax paid at marginal rates, saying it would stop “overly punitive outcomes”. However the government “needs to work though the details” of withdrawing the associated earnings because it would easily result in “complex compliance requirements”. SPAA was “disappointed” at the freezing of the Super Guarantee rate for four years, though was “pleased to see that employers and superannuation fund members would have certainty on 1 July 2014 about the SG rate”.
The Financial Services Council also found the pause of the SG rate at 9.5% “disappointing”, but said the government had “delivered on its commitment” to not make adverse changes to superannuation.
The ACTU said the government was “making it harder for Australians to save for a decent retirement” by freezing the SG increase.
The FPA welcomed the change to the excess non-concessional contributions rules and thought the government “held firm on its commitment to avoid adverse changes” to super.
However the Association of Superannuation Funds of Australia (ASFA) thinks “ that the original timetable for phased increases should be maintained and that this view has wide support in the community:
“People expect to be able to live comfortably and with dignity in retirement, for all of their post-work years. Increasing the SG is a crucial part of ensuring people save enough of their income to help fund the lifestyle they expect in retirement. We urgently ask the government to reconsider this decision and proceed with the planned, phased increases to the Superannuation Guarantee.”
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