Super contributionsThis morning I listened to Federal Member for Kooyong Josh Frydenberg explain the purpose of superannuation. It seems we share the same understanding that its purpose is to provide savings for retirement. However this seems to contradict the changes proposed to superannuation by the Government in Tuesday night’s Federal Budget, which make it difficult to build enough savings to even achieve a comfortable retirement.


But what does a comfortable retirement look like? According to ASFA*, Australia’s peak superannuation body, a single person needs $45,000 per annum to have a comfortable retirement. To achieve this without relying on the Government’s Age Pension you would need savings of approximately $1.2 million at age 60**. The announced changes would limit the allowable superannuation contributions significantly.

The proposed changes would allow the following contributions:

  • Before tax contributions of $25,000 pa (including Superannuation Guarantee)
  • A lifetime limit of $500,000 for after-tax contributions
  • A lifetime limit of $1,355,000 for small business assets rollover relief

In short, if you’re an employed person, this means you would need to maximise superannuation contributions from the age of 30 to achieve enough superannuation savings to have a comfortable retirement at age 60!

I’m not sure about Josh, but I don’t know many 30 year olds contributing $25,000 per annum to superannuation. What I generally see is individuals in their 50s with a 10-year window of opportunity to really save for their retirement.

Are the proposed changes really in line with the “purpose of superannuation”?



* Association of Superannuation Funds of Australia

** Based on the average life expectancy of a woman and indexation of 3% pa on savings and expenses.

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