Super industry fights plan
The Coalition has long promised to get rid of the low-income super concession, a payment of up to $500 a year for people earning up to $37,000, due to its links with the former government’s mining tax.
The concession is designed to compensate low-income earners for contributions tax paid on their super, and the industry argues that scrapping it hurts the low-paid, especially women and casual or part-time workers.
Four industry groups – Women in Super, the Australian Institute of Superannuation Trustees, Industry Super Australia and the Association of Superannuation Funds of Australia – argued to retain the concession in Canberra on Wednesday.
Alissa Harnath, of Women in Super, said holding on to the payment would be the group’s ‘‘main focus for the next six months, absolutely’’.
‘‘The Greens and Labor are behind it,’’ she said. ‘‘We will continue to lobby on it.’’
The push comes as the superannuation industry waits on a consultation paper to be released on Thursday by Assistant Treasurer Arthur Sinodinos. The paper will cover fund governance and the opening up of default funds in the modern award system.
It follows calls by the Productivity Commission and think tank the Grattan Institute for the government to increase the age at which people can access the age pension to 70.
The Grattan Institute also suggested the government lift the age at which people can access their super – called the preservation age – to 70.
The Financial Services Council, the lobby group for retail super funds such as AMP, has also backed a phased increase in the preservation age, to 62. The council does not support the abolition of the super concession.
Frequently Asked Questions about this Article…
The low-income super concession is a payment of up to $500 a year for individuals earning up to $37,000. It's designed to compensate low-income earners for the contributions tax paid on their superannuation. This concession is crucial as it supports low-paid workers, particularly women and those in casual or part-time roles.
The superannuation industry is opposing the government's plan because scrapping the low-income super concession would negatively impact millions of low-paid individuals. The industry argues that removing this support would disproportionately affect women and part-time or casual workers.
Four industry groups are advocating to retain the low-income super concession: Women in Super, the Australian Institute of Superannuation Trustees, Industry Super Australia, and the Association of Superannuation Funds of Australia.
The Greens and Labor parties are supporting the retention of the low-income super concession. These political groups are backing the superannuation industry's efforts to maintain this important financial support for low-income earners.
The Productivity Commission and the Grattan Institute have proposed increasing the age at which people can access the age pension to 70. Additionally, the Grattan Institute suggests raising the superannuation access age, known as the preservation age, to 70.
The Financial Services Council supports a phased increase in the preservation age to 62. However, they do not support the abolition of the low-income super concession.
The consultation paper by Assistant Treasurer Arthur Sinodinos will address fund governance and the opening up of default funds in the modern award system. This paper is part of the ongoing discussions about superannuation reforms.
For everyday investors, particularly those on low incomes, the abolition of the low-income super concession could mean less financial support for their retirement savings. This change could make it more challenging for low-paid workers to build a sufficient retirement fund.
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