The government's incessant tinkering with superannuation rules makes long term forecasts problematic. We tend on the website to have short term (1 year) and long term variations of calculators for this reason. The one year calculator can often have far greater precision.
It seems to me that some caution and conservatism is needed for long term assumptions given the governments track record. In 2009 when contribution caps were halved to $50,000 the AWOTE indexation was reset to a December 2008 base. The latest freezing of indexation requires a decision about what future concessional contribution caps will be. To be conservative we have assumed that it will be $25,000 in 2012-13 and 2013-14 and then indexed from a new $30,000 2014-15 base. It would also seem prudent to assume the higher cap for assets under $500,000 from 1 July 2014 will be a fixed $25,000 p.a. on top of the nominal concessional contributions cap. No indexation of the 500,000 is allowed for.
Modification to the co-contributions have occurred, even before previously announced changes have become operational. That is the level of tinkering we are dealing with. Here we have assumed for the website calculators that the $500 contribution halving is permanent and the $31,920 (lower) and $46,920 (higher) thresholds remain fixed.
With the $500 Low Income Superannuation Contributions (since the logic is a link to the 15/19% tax bond) a link to this value makes sense. In other words where bracket creep is allowed, it can be assumed this applies to the LISC also.
With the higher income contgribution tax surcharge the $300,000 application level has not been indexed.
The above will be sufficient to produce some accumulation and transition to retirement longitudinal calculators. We would be interested in comments as to any suggested changes to the above approach.
The NetActuary Team