The SMSF Association is urging the introduction of a spousal rollover measure for superannuation fund members that would allow individuals with higher superannuation balances to rollover a portion of their superannuation balance to their spouse to help even out balances.
In its 2019-20 Budget submission, the Association says the gender retirement gap is an ongoing problem for the superannuation system and, because of the recent introduction of the transfer balance cap and the lack of opportunity for couples to adjust for its introduction, most couples have balances that are heavily weighted to one member.
SMSF Association CEO John Maroney says: “This measure would provide an effective and efficient way to significantly improve the superannuation retirement gap between genders and improve equalisation between couples, particularly for women.
“Although there are strategies that allow re-contributions, such as using spouse contribution tax offsets or spouse contribution splitting, they are limited in their effectiveness due to contribution threshold and cap restrictions, withdrawal restrictions, and lack of flexibility and impact of spousal contribution measures. In our opinion, a rollover measure would be far more effective.”
The Association is also urging the Federal Government to lift the contribution cap for individuals over age 50 by $10,000 to $35,000.
The current contribution cap of $25,000 is inadequate, particularly for Australians approaching retirement age, because it “negatively affects their ability to save an adequate amount of superannuation to be self-sufficient in retirement”.
Maroney says: “We believe Government policy needs to incentivise and encourage Australians to take ownership of their retirement and contribute to their superannuation, particularly when they have greater financial capacity to do so.
Research commissioned from the actuarial firm Rice Warner to analyse the contribution patterns of SMSF members shows a considerable increase in voluntary contributions by members who are in their 50s and upwards.
“This accords with the generally accepted idea that people will contribute more to superannuation later in life when they have increased financial resources to do so.”
The Association also used its submission to tell the Government that with the potential for enormous change in the superannuation landscape, now is an opportune time to look to define the objective and role of superannuation, including what it is supposed to deliver and how all parts of the superannuation system fit together, reinforce recommendations regarding an SMSF education for SMSF advisers and simplify the superannuation system.