The Federal Government has been urged to use the upcoming Federal Budget to change the rules around superannuation to make it more attractive for low-income earnings via a contributions tax rebate.
In a pre-Budget submission filed with the Federal Treasury this week, the Association of Superannuation Funds of Australia (ASFA) argued that, currently, there is no tax advantage for those earning less than $35,000 a year for employer or salary sacrifice contributions.
ASFA chief executive Pauline Vamos said that if a contributions tax rebate was given to someone earning $30,000 a year, their retirement savings would go from $145,000 to $171,000 over 35 years.
She said that ASFA had estimated the annual cost to the Budget would be around $600 million a year and benefit around two million workers at the same time as lower expenditure on the age pension.
The ASFA submission also recommended that middle-income earners be assisted by a partial rebate of contributions tax or an enhancement of the existing superannuation co-contributions regime.