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Changes to Superannuation

Changes to superannuation must consider long term costs

Glenn Fairbairn
Director/Private Client Adviser
23 Nov 2015

With the Federal Government budget under increasing pressure, there is constant discussion about new measures to raise revenue. One recent proposal has been the introduction of a lifetime cap on contributions to superannuation.

Financial services stakeholders including; industry super funds, Deloitte Access Economics and the Grattan Institute, have called for a lifetime cap on the amount that individuals can contribute to their superannuation accounts. Their reasoning is that it may restrict people from funnelling a significant amount of money into superannuation throughout their final working years in order to minimise their tax benefits, when in fact they are already in a comfortable financial position.

What superannuation caps already exist?

Presently, there is annual superannuation cap of $180,000 on non-concessional superannuation contributions. Those aged under 65 can bring forward future contributions, but cannot contribute more than $540,000 over three years. In my opinion, these existing caps already prevent people from rorting the system therefore, a lifetime cap is not necessary.

What impact would lifetime caps have on the Federal Budget?

A report by the Parliamentary Budget Office (PBO), commissioned by the Australian Greens, showed that placing a lifetime cap on voluntary superannuation contributions could end up costing more money to the budget and to Australian taxpayers.

The PBO calculated the savings if there was a $500,000 lifetime cap on voluntary contributions and the findings were not compelling. The measure might only save about $165 million over four years. By contrast, a $600,000 lifetime cap, would cost the budget $805 million by 2026, and an $800,000 cap would cost $3.3 billion over the decade.

Long term view is crucial

There is no doubt that superannuation will be a target for future revenue raising. However I urge the Federal Government to ensure that speculation regarding potential change does not undermine confidence in the system and punish those that have in good will, been voluntarily saving to fund their retirement.  

Structural changes may indeed raise revenue in the short term, but if the fear of uncertainty results in the loss of faith in the overall superannuation system, then the cost of meeting future Age Pension payments may far outweigh any revenue raise from these proposed changes.

The information provided above is general information only and individuals should seek specialised advice from a qualified financial adviser. Please contact Hewison Private Wealth for more information.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.