AIST backs low income earners’ rebate

AIST has called on Parliamentarians and the super industry to support the Low Income Super Contribution Scheme (LISC) to ensure that the lowest paid Australians "got a fair deal from the superannuation system".

AIST president Cate Wood said 3.5 million Australians, including 2 million, women could be significantly worse off if the LISC was removed.

"Removing this scheme — as the Coalition has foreshadowed it will do if it wins the next election — will mean that low income earners will pay more tax on their super than their take-home pay.

"That's not only unfair, but it means that 3.5 million Australians, including some two million women, could be significantly worse off in retirement," Wood said.

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Wood said the media and industry debate was too focused on tax concessions for the well-off.

"We need to get some perspective in the super debate," Wood said.

"There is lot of noise about tax concessions for the very rich, or whether $1 million is a lot to retire on.

"Meanwhile, a serious threat to a policy measure that is squarely aimed at helping lift the standard of living in retirement for 3.5 million people hardly rates a mention," she said.

She said the LISC delivered certainty and confidence in super, something much sought after, and hence it was something the industry needed to support.

AIST research found the LISC, which came into effect on 1 July 2012, might be worth more than $62,000 at retirement for those earning an annual income of less than $37,000.

"For the low paid — as well as many women who are working part-time to raise children or care for family members — this level of savings has the potential to make a significant difference to their retirement outcome," she said.

Last week the Coalition indicated it would scrap the LISC, which is meant to be funded by the Mining Tax and which the Coalition said had not netted enough to offset the tax concessions.