SMSF Association chief executive Andrea Slattery said any political move to reduce the ability for people to make pre-tax superannuation contributions would unfairly hurt generations X and Y "who have not had the opportunity to build their superannuation balances."
The Association opposes a mooted reduction in the general concessional super contribution cap from $30,000 to $20,000 a year as part of changing the superannuation tax mix in this year's federal budget.
Slattery said the government needs to step in now and rule out speculation that a lowering of the current cap is being considered.
"Reducing the cap will critically undermine the superannuation system's ability to give people the opportunity to save for a self-reliant, secure and dignified retirement," Slattery said
"In particular, it is extremely relevant to people who have volatile incomes throughout their working lives, whether it be due to career breaks to raise children, broken working patterns, or because they own or work in businesses whose fortunes rise and fall with changing economic conditions.
"These people need adequate caps so they can maximise their contributions when they have sufficient income to do so in order for them to build their retirement savings throughout their working lives. Lower caps simply reduce their opportunities to save."
The Association notes the current general concessional contribution cap is much lower than the $50,000 (under 50 years of age) and $100,000 (aged 50 and over) caps introduced for the 2007-08 financial year. The current cap is $30,000 for people under 50 and rises to $35,000 for people 50 and over.
Slattery says the mooted change in the contribution caps is another example of a public debate about fiscal issues rather than a long-term debate about our future savings and it continues to erode the confidence of all Australians in the system.
"We reiterate our position that the government must enshrine the objectives of superannuation in legislation and seek more accurate measurements of the costs and benefits of superannuation to the economy before any significant changes are made to the system," Slattery said.
"Further, to avoid constant budget driven speculation, superannuation policy should be taken out of the annual Budget cycle by tying significant changes to the superannuation system only after a longer-term review. The Intergenerational Report would be an appropriate vehicle to tie a periodic review of the superannuation system to."
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