The Institute of Public Accountants has urged the Government not to reduce the concessional contributions cap, in particular for people aged 50 and over.
The 2016 Budget included a reduction in the concessional contributions cap to $25,000, from 1 July 2017.
“The IPA does not support the reduction of the contributions cap to $25,000 and more so, we do not agree to the reduction of the current cap of $35,000 for individuals aged over 50 years of age,” said IPA chief executive officer, Andrew Conway.
“In fact, people aged over 50 should be encouraged to make further superannuation contributions if they have the capacity, to address any superannuation balance shortfall,” he said.
“The current annual concessional contributions cap of $35,000 for over-50s is less than a third of what the cap was 10 years ago.”
“The 2010 Henry Tax Review supported a higher contributions cap for Australians aged 50 and over and we support that position.”
“Reducing the cap is adverse to Australians building a self-reliant retirement.”
The IPA said the situation has been “further exacerbated” by the deferral of the start date of ‘catch-up’ concessional contributions by one year, to 1 July 2018. This was one of the revenue offsets as part of the changes to the non-concessional contribution cap measures – abandoning the $500,000 lifetime cap in favour of a $100,000 annual cap with a further restriction tied to the general Transfer Balance Cap.
“This effectively means the first ‘catch up’ will not take place until the 2019/20 financial year,” said Mr Conway.