Flexibility around the concessional contributions cap announced in the 2016 Budget will be “particularly helpful” for women returning to work, says the Australian Institute of Superannuation Trustees (AIST).
The 2016 Budget includes a measure to allow people with superannuation balances under $500,000 to carry forward unused concessional contributions cap to later years, to a limited extent.
“While the annual concessional cap limit has been reduced to $25,000, the carrying forward of unused cap amounts will be allowed on a rolling basis for five years. This effectively provides the opportunity to put up to $125,000 into super (including SG contributions) in the last year of a five year period, or say, $50,000 over a two year period,” said AIST.
AIST CEO Tom Garcia said the organisation had long called for flexibility around the concessional contributions caps, particularly to help people who take time out of the workforce to care for children or other family members.
“This is a sensible policy measure that recognises our super system needs to become more flexible in line with the way people work,” he said.
“Not everybody works consistently for 40 years and workers – particularly women who take career breaks to care for family members – shouldn’t be penalised.”
However he did note that many workers will not have cash available to take advantage of the flexible caps, but older workers with the funds could make “significant” contributions to catch up on the superannuation savings when they return to work.
“The government has recognised that the system shouldn’t be one size fits all,” said Mr Garcia.