Budget measures 'undermining confidence' in super

SYDNEY - A reduction to the superannuation co-contribution scheme and a proposal to lift the age when retirees can access their savings will undermine confidence in super, experts say.

Ernst & Young partner Graeme McKenzie says the constant tinkering with the superannuation system has left people uncertain and less likely to adequately fund their retirement through super.

The consequence could be that the already heavy burden on the federal government's finances from pensions increases further. "I do have a concern that people might just run out of money," he said. "If there is less incentive to place money in for longer-term savings, then there is likely to be less savings there at the end of the day. That may well place more pressure on the government to fund pensions in the future."

The Government announced in this year's Budget it was temporarily reducing its contribution to low income earners who chose to voluntarily deposit extra money to their superannuation funds. It also revealed a recommendation from its review of the tax system that the age when someone can access their super - known as the preservation age - be lifted to 67 years.

Mr McKenzie said the current age was 60 with some exceptions for the baby boomer generation.

"These changes don't add at all to the confidence of the Australian superannuation industry, which I think is a real shame."

- AAP