SPAA rejects Govt approach to super contribution cap

The Self-Managed Super Fund Professionals Association (SPAA) has rejected the Federal Government’s proposal to raise the concessional superannuation contribution cap to $50,000 for all those over 50 with less than $500,000 saved.

The SPAA stated that the raising of the cap should apply to all over 50s regardless of their super balance.

The SPAA chief executive, Andrea Slattery (pictured), said an arbitrary and unindexed $500,000 balance threshold would be overly complex and impose unnecessary costs, and ran counter to the Cooper Review’s aim to improve efficiency.

Slattery added that it would also discriminate against people who make voluntary non-concessional contributions from after-tax dollars, and may also result in an increase in the number of people inadvertently breaching the contribution caps.

Some super members may also mistake the $500,000 threshold figure as an adequate amount for retirement, whereas research showed that retirees needed significantly more than that, she said.

“As an alternative to the $500,000 threshold, SPAA has recommended the concessional cap be increased from $25,000 to a suitably higher amount for all individuals over age 50 to give them the opportunity to contribute more to super in the years leading up to retirement,” said Slattery.

“If the Government decides to retain the $500,000 threshold, SPAA recommends that only concessional contributions and investment earnings be counted against it. Given that only concessional contributions and fund investment earnings are subject to concessional tax treatment, SPAA believes only the member’s concessional contributions should count against the $500,000 threshold.”