The Investment and Financial Services Association (IFSA) says the Federal Budget’s abolition of the super surcharge is great news for Australia’s long-term retirement savings.

Deputy CEO John O’Shaughnessy says the surcharge effectively moves tax cuts into long-term savings and is central to IFSA’s pre-budget submission to the Federal Treasurer.

“Australians aged in their 50s with small super account balances were being hit with the surcharge,” he said. “It didn’t make sense to keep a tax that hit people desperately saving for their retirement in the last few years of their working lives.”

IFSA commissioned research this year that showed around 200,000 people in that profile were being targeted by the tax, and Mr O’Shaughnessy says the surcharge abolition will make many of them less reliant on the aged pension in retirement.

“Many Australians will no doubt take the opportunity to put more money into their super as a result of greater income tax relief,” he said.