Budget approach to superannuation crucial
The Government will need to be careful not to further erode confidence in the superannuation system as it frames the May Federal Budget, according to Institute of Chartered Accountants superannuation specialist Liz Westover.
Reflecting on the task confronting the Government, Westover pointed to the funding challenges confronting the Government and the likelihood of it looking to superannuation as a source of revenue.
"The current tax concessions built into the super system are costing the budget bottom line more and more each year, especially as a greater proportion of our population move to retirement age," she said.
"However, with constant change in all facets of the super system featuring in recent years, the Government will need to carefully consider how further changes may impact on the confidence Australians have in their superannuation."
Westover said the industry had witnessed a considerable erosion of confidence in the system already and, because of this, the Government would need to look to reverse the trend in order to encourage more people to save for their retirement.
"Clearly, there are some questions that need to be answered around whether or not we can continue to pay for all those tax concessions, but it will be important to strike the right balance of a fair, equitable and workable system and public confidence if the government wishes to engender a sustainable retirement incomes system in the medium and long term," she said.
Westover said a view of super in the short, medium and long term was crucial.
"Any changes to super in this year's Budget will need to be carefully assessed for long-term impacts," she said.
"Alienating Australians from the super environment now may result in a greater burden on the Government purse in years to come through reliance on the aged pension - the ability of Australians to achieve a comfortable retirement will be jeopardised."
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