Case for super incentives

From July 1, 2021, the annual superannuation contribution caps are set to increase for the first time in almost five years. The concessional cap for those under 75 years old will rise from $25,000 to $27,500, and the non-concessional cap will increase from $300,000 to $330,000 (using the bring-forward rule) for under-65s and $100,000 to $110,000 for those aged between 65 and 74.

The $1.6 million non-concessional cap threshold is also increasing, due to the indexation of the general transfer balance cap, to $1.7 million.

Increases in contribution caps are determined by a set formula based on movement in average weekly ordinary times earnings.

The 10% increase after five years may seem insufficient to those looking to build their super for a reasonable retirement. There needs to be greater incentive for people to save for their retirement and there is no better incentive than the tax benefits for making contributions. If these incentives are static, then people will look at alternatives, such as buying negatively geared property. Andrew Yee, director of superannuation, HLB Mann Judd Sydney