It is “critical” that people be able to contribute more to superannuation later in life to build up adequate retirement savings, according to the SMSF Association.
Analysis of data of 14,000 SMSF members shows that they make ‘catch-up’ super contributions shortly before reaching retirement. The research shows that average personal contributions peak in the age range 60-64.
SMSF Association CEO Andrea Slattery said the research “demonstrates the importance of concessional caps to allow people to top up their payments later in their working lives to ensure they are self-sufficient in retirement.”
“The research clearly shows there is strong increase in SMSF member contributions to superannuation after entering their 50s and then through to their early 70s.”
“This supports the Association’s long-held belief that most people make significant contributions to build their retirement savings later in their working life.”
“Without sufficient contribution caps to allow people to make the necessary contributions to their superannuation, these catch-up contributions will not be made, reducing people’s ability to achieve adequate superannuation savings to rely upon on retirement.”
“Any move by the Government to reduce concessional contribution caps will undermine people’s ability to build adequate savings to use in retirement, with the inevitable effect of increasing their reliance on the age pension.”
There has been speculation that the Government would reduce the general concessional contributions cap from $30,000 to $20,000 in the upcoming Budget, however this now appears less likely.
The Treasurer Scott Morrison has previously said he would like to make it easier for people with broken work patterns to contribute to superannuation. This would likely be supported by the SMSF Association, which has been calling for unused contribution caps to be carried forward to later years.
The research was commissioned by the SMSF Association and the actuarial firm Rice Warner in conjunction with BGL Corporate Solutions.