Extra payment caps a real super pooper
THE amount of voluntary superannuation contributions has drastically fallen under new changes restricting how much Aussies can tip in.
New analysis by super research house Super Ratings found in the 2017-18 financial year voluntary contributions fell to $19.8 billion – a drop of 35 per cent on the previous year.
In the 2016-17 financial year, Australians contributed a massive $30.4 billion extra into their super accounts ahead of the caps being introduced.
This was a fall from $2751 per active super member in 2016-17 to just $2225 to 2017-18.
Major policy changes included concessional contribution caps being wound back to $25,000 in the last financial year, which made it less enticing for Australians to proactively bolster their super.
The cap had been $30,000 for those under 50 and $35,000 for those over that age.
These amounts include compulsory superannuation payments made by a worker’s employer.
Australian Institute of Superannuation Trustees chief executive officer Eva Scheerlinck said while there had been many changes to how much extra people could tip in it didn’t have to be a deterrent.
“The best way to optimise your retirement savings is to make voluntary contributions when you can and particularly when you are young,” she said.
“January is a great time to start making extra voluntary contributions.”
Super will remain a hot topic ahead of the upcoming federal election. Last week, the Productivity Commission released a report into ways to drastically overhaul super.
This included a new plan to allocate default super products, listing the 10 best funds and delaying an increase to timeline for the 12 per cent super guarantee.
New Australian Super figures found in 2018 their members’ voluntary contributions fell to $2.3 billion, down from $2.9 billion in 2017.
But surprisingly the number of people tipping more rose from 159,000 in 2017 to 183,600 in 2018.
The fund’s group executive of product, brand and reputation, Paul Schroder, said tipping in extra from a young age could make a huge difference.
“A 25-year-old putting an extra $50 a month into their super – just $600 a year – will have $175,000 extra by age 65,” he said. “A 35-year-old doing the same will have an extra $79,000, and a 45-year-old will have an extra $32,000.”