Super hopes for Swan’s first Budget

Kate Anderson

The industry is eagerly awaiting the first Federal Budget to be handed down by the Rudd Government tonight, with many hoping for further amendments to superannuation.

While the Howard Government’s overhaul of the super system in 2006 introduced many improvements, it seems many in the financial services industry believe there is still a way to go.

Mariner Financial superannuation and retirement strategist Kate Anderson is not alone in her wish to see the superannuation guarantee (SG) increased on the path to a final target of 15 per cent.

Anderson would also like to see the work test removed in an effort to encourage more contributions from those over age 65, with Australia home to “an ageing workforce that is likely to be working well into their 60s”.

Anderson also wants see higher concessional contribution limits introduced for high-income earners.

“The transitional concessional contribution limit of $100,000 should be extended beyond 2012 for all superannuation members over the age of 50,” she said.

“Ideally, all superannuation members of any age should be able to access a much higher concessional contribution limit than is currently allowed.”

This would also benefit those with self-managed superannuation funds (SMSFs) who wish to transfer assets in-specie, or those who receive an inheritance.

Anderson suggests another way the Government could stimulate higher super savings is to apply a sliding scale for contribution tax, giving lower income earners the ability to invest a higher proportion of their savings tax free.

She has also called for an abolition of the so-called ‘death tax’ on superannuation benefits paid to non-dependant beneficiaries.

SMSF technical and administration specialists Multiport has called for increased portability of super, which would allow insurance cover to be more easily moved from one fund to another. Multiport is also pushing for an increased limit on the Government co-contribution scheme to $50,000, and an increase in co-contribution levels to $2,000.

AMP chief economist Dr Shane Oliver believes the highlights of the Budget are likely to include a surplus of at least $20 billion, income tax cuts and increased spending on education, training and infrastructure. Oliver also believes there will be “cutbacks on middle class welfare, tax increases on cigarettes and alcohol and public service cutbacks”.

In his most recent market and economic update, Oliver said the Budget is unlikely to alter the outlook for interest rates or have a major impact on financial markets.