BDO calls for 20-year stability period for super
Tax and Advisory firm BDO Australia has called on both major political parties to commit to a sustained period of stability for the superannuation tax system.
BDO Superannuation partner Paul Rafton says the current instability of the super system stemming from proposed changes from the government is discouraging younger superannuants aged between 25 and 40 from making contributions to super.
“We conducted a brief survey around our office focusing mainly on 25- to 40-year-olds and found that no one was considering contributing beyond the mandatory super guarantee,” Mr Rafton said.
“It's not that people don't want to plan for the future, but they need certainty if they are to stay invested in the process.”
While an ideal set of superannuation rules will mean different things to different people, he said, for most Australians a sense of stability and certainty will go a long way to create confidence in their funds and their ability to contribute.
“If both government parties were to commit to a sustained period of stability say for at least 20 years, it would allow Australians to prepare for their future and know year-on-year what they are able to contribute and what the results will be,” Mr Rafton said,
“Ideally, any changes that are made will be followed by the government drawing a line in the sand and saying this is what superannuation will look like for a significant period of time.”
Mr Rafton said if people are contributing beyond the bare minimum to their superannuation fund, it's unlikely they will have enough to retire on, which means they will need to lean more heavily on the old age pension or other investment alternatives.
“If a person in their 20s only contributes the mandatory 9.5 per cent from now until their retirement, they'll fall a significant portion short of what they will need to live a comfortable lifestyle in retirement.”