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Too much complexity in super debate
The superannuation industry should not be seeking to complicate the debate by focusing on lifetime contributions and complex caps but, rather, be focusing on reducing lucrative earnings tax concessions, and whether current contributions caps are adequate.
That is the assessment of leading actuarial consultancy, Rice Warner, which has pointed to the current policy debate suggesting a simpler and more focused approach is justified.
In an article published on its website just ahead of last week's Association of Superannuation Funds of Australia (ASFA) conference, Rice Warner said that almost every public policy statement on superannuation now contained a suggestion to restrict the generosity of the system by capping the amount of superannuation to a reasonable level.
It said the rationale for this was that tax concessions are tilted towards the wealthy who use superannuation for estate planning as well as for retirement income.
"The statements range from the Grattan Institute which suggests limiting concessional contributions to a sparse $11,000 a year through to Deloitte's suggested lifetime cap of $580,000 contributions, and ASFA's proposed limit on member balances when they get to $2.5 million," the Rice Warner article said.
However, it asks whether Australia's superannuation system is so fiscally inefficient that it needs such changes.
While acknowledging that under the current regime it is technically possible for someone from a wealthy family to start at age 22 to accumulate $1.425 million of concessional contributions over a lifetime, few would actually try to do so.
"So trying to limit the total lifetime contributions seems more work than is sensible," it said.
It suggested that perhaps, before complicating the system with new complex caps on balances or lifetime contributions, the industry should be focusing the discussion on whether the current contributions caps are adequate and reducing the much more lucrative earnings tax concessions.
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