Provided by Mercer: 13/5/09
Mercer supports an extension in the pension age but is disappointed with cuts to concessional superannuation contribution rates. It appears the cuts have been made without a clear long-term retirement income framework.
Mercer’s Chief Executive, Peter Promnitz, said it was satisfying to see some long term changes to pension age policy, which Mercer has been calling for as a necessary step for some time in light of increasing life expectancy.
“It is concerning, however, when changes such as the caps on concessional contributions are made in isolation.
“Tinkering with the system and making piecemeal changes will potentially damage Australians’ confidence in the stability of superannuation rules and halving the cap on concessional contributions may provide short-term budgetary relief but lacks a long-term plan or foresight.
“Anyone playing catch-up for their retirement income –baby boomers nearing retirement or women out of the workforce for extended periods – will be hit by these changes,” said Mr Promnitz.
Cuts to the concessional contribution rate disadvantage employees who are nearing retirement or have been out of the workforce for extended periods (eg. women), as well as self-employed workers, who have simply not been in a position to contribute to superannuation throughout the majority of their career.
“We are pleased to see that the government co-contribution to super has remained, albeit reduced. It’s a valuable incentive for Australians to save for their retirement via superannuation – and it is important the industry continues to communicate the value of the scheme,” he said.
Budget Bytes
In our “Budget Bytes” series developed in the lead–up to the 2009 Federal Budget, Mercer’s experts share observations and recommendations regarding the future of retirement incomes, and specifically superannuation, in Australia.
To view the Budget Bytes vodcasts, visit mercer.com.au
Read Mercer's report on the 2009 Federal Budget
Media enquiries
Please contact Libby Woolnough on 03 9623 5361 or at libby.woolnough@mercer.com
This information has been prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 for general information only. The information does not take into account your personal objectives, financial situation or needs. Therefore, you should not act on this information if you have not considered the appropriateness of this information to your personal objectives, financial situation and needs. You should consult a licensed or appropriately authorised financial adviser before making any investment decision.
