The Government’s plan to gradually increase the superannuation guarantee from 9 per cent to 12 per cent will help to bolster retirement savings but the Institute of Public Accountants warns that the administration burden on small business must be considered.
With longer life expectancy and an increase in the ageing population, it has become even more important for the Government to address the savings gap by increasing the superannuation guarantee. While Australians have been able to boost their superannuation contributions on a voluntary basis, the reality is that many do not realise the amount they need to retire until it is too late to make effective additional contributions.
The Institute’s chief executive officer, Andrew Conway said, “The Government’s strategy to increase the superannuation savings will help to financially prepare Australians as they enter retirement but the cost of administering superannuation is a major burden for small business. The cost, in time and money, is lost money for small business.
“They must either divert precious time to administering something they don’t understand, or divert needed cash flow to pay a professional to administer it for them. With little direct benefit to small business, they are merely implementing government policies.”
By implementing changes now the Government is ensuring that future generations of retirees will be able to adequately sustain themselves financially and will not depend heavily on the government pension system. Despite the clear benefit for individuals, more support needs to be provided for small business to implement the change.
The Government needs to make this right by exempting small business from the administration of superannuation.
The Institute of Public Accountants recommends that small business should be able to choose to have superannuation contributions paid directly to the Australian Taxation Office (ATO), at the same time as PAYG payments are made, with the ATO taking responsibility for ensuring the money goes to the right account.
