Objective of super is providing retirement incomes | KPMG | AU

Providing retirement incomes is the real objective of superannuation

Objective of super is providing retirement incomes

A series of proposed changes to make the superannuation system fairer and stronger have been made by KPMG in its submission to the Treasury on the objective of superannuation.


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In the paper KPMG supports a legislated shift in policy focus from wealth accumulation to ensuring super helps to provide Australians with an adequate retirement income. It believes this statutory objective will help drive change in the industry.

KPMG’s recommendations include:

  • Reducing the annual income threshold at which the 15% tax rate applies to concessional super contributions 
  • Cutting the existing annual non-concessional contribution cap from $180,000
  • Restricting the ability to bring forward 3 years’ worth of non-concessional contributions
  • Introducing measures to provide greater flexibility for contributions to personal retirement savings for owners of SMEs
  • Introducing limited exemptions from capping arrangements to allow low income earners and those who have broken work patterns – often women – to boost their super contributions
  • Expanding the ASFA income adequacy standard to include home ownership and aged care considerations 
  • Reviewing all legislative impediments to the creation of innovative and comprehensive retirement income products by trustees 

Paul Howes, KPMG Partner and Head of Wealth Management Advisory, said: “The Government’s proposal to enshrine the purpose of superannuation into legislation as being to provide Australians with a decent retirement income is sound. That clarity of purpose should aid both consistent policy delivery and industry development of additional retirement products and services to retirees. But we need concrete proposals to help achieve this.

“The tax benefits associated with concessional contributions need to be more evenly distributed across the Australian workforce. And those who have broken work records and/or low incomes, usually women, need exemptions from the current capping arrangements to help compensate for their reduced contributions. This is both equitable and will boost the productivity of our economy.

“Owners of small and medium-sized enterprises also suffer from current regulations, which make it difficult for them to invest both in the business and their own retirement pots. There are limits on subsequent catch-up contributions once the business is more firmly established. We need to help our SME owners, who will be the source of many jobs in the future.

“More flexibility is needed in the super regulatory framework if trustees are to be able to create innovative comprehensive income products for retirement (CIPRs), such as annuities. We would recommend a thorough review of any legislative obstacles to the product rationalisation and innovation that is necessary if the government’s objective for superannuation is to succeed.”

Paul Howes concluded: “Most importantly of all, it is crucial that the superannuation system should not be undermined, especially the compulsory nature of super contributions. While it would be understandable, given our budget deficit, if politicians eyed the $2 trillion pool of funds under management, our ageing population requires that those funds are kept for what was intended - their exclusive use should be towards the provision of retirement income for Australians.”

Further information

Ian Welch
Senior Communications Manager, KPMG
T: 02 9335 7765 / 0400 818 891
E: iwelch@kpmg.com.au

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