AFA/ISA polar opposites on lifetime caps


The Association of Financial Advisers (AFA) and Industry Super Australia (ISA) are on opposite ends of the spectrum on lifetime contribution caps when it comes to improving women's retirement savings.
In its submission into the Senate Inquiry on the economic security of women in retirement, the AFA recommended considering the introduction of lifetime super contribution caps for low income earners, and those with broken careers due to caring responsibilities.
The AFA argued as contribution caps are based on a financial year period, it favoured those with consistent work patterns and disadvantaged those who take career breaks.
"We encourage the Government to consider the introduction of lifetime superannuation contribution caps for low income earners and those with broken careers to allow them the opportunity to catch up on lost retirement income contributions due to inconsistent work patterns," the AFA's submission said.
However, ISA said lifetime contribution caps would not improve women's economic security.
"…most women are unable to make any additional voluntary contributions to their superannuation, let alone the significant additional contributions required to make up the gap in retirement savings," the ISA's submission said.
"Very few women encounter a problem with contribution caps constraining their capacity to build their super. The far greater problem is that women don't have surplus income to put into their superannuation.
"They [lifetime caps] also introduce greater optionality and discretion in the timing of contributions, which typically benefit those with the means to exercise this discretion; in this instance, individuals with substantial wealth and income."
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