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The Association of Superannuation Funds of Australia (ASFA) has called on the Federal Government to increase the Superannuation Guarantee (SG) to 12 per cent.
ASFA has been promoting the increase for some time even though it runs counter to its previous promotion of soft compulsion. Its call also runs counter to the initial recommendation of the Henry Tax Review released in May, which stated that SG should remain at 9 per cent.
ASFA appears to have renewed the call for an increase so as to bring the issue to the forefront ahead of the release of the final Henry Tax Review report (expected to be released for consultation in late February) and the May Budget.
“Whatever the findings or recommendations from the Henry Review, it is ASFA’s position that the SG should be raised to 12 per cent this year,” said ASFA CEO Pauline Vamos.
“The Henry Review has the potential to significantly alter Australia’s taxation framework. We look forward to a broad and inclusive discussion on its findings.”
Vamos added that it is vital that the government ends speculation about possible changes to taxation that may affect superannuation.
“At the same time, we believe the government needs to act promptly to address adequacy in retirement issues,” she said.
ASFA has also called for compulsory contribution to be gradually introduced for self-employed people and that the $450-a-month earnings threshold for receipt of compulsory contributions be substantially reduced or abolished.
These recommendations also run contrary to the Henry Tax Review panel’s initial recommendation that the SG not be extended to the self-employed and that the $450-per-month threshold be retained.
The Henry Tax Review report is currently under scrutiny by the Treasury, following which is expected to will be released for public consultation.
ASFA has also recommended that the current superannuation co-contribution be enhanced to assist a more equitable tax treatment for low-income earners.
“The Federal Government must demonstrate its commitment to enhancing retirement incomes for Australian workers by finalising the inquiries and reviews it has in place, raising the level of SG and extending compulsory superannuation to a greater proportion of the workforce,” said Vamos.
