“We favour specific, highly targeted measures aimed at curbing any distortions instead of widespread changes to the existing superannuation scheme that impact all members.”

As part of the proposal, Westpac said the $2.5 million cap should not apply to assets used to purchase an eligible longevity product such as annuities.

Westpac argued this will “encourage retirees to protect themselves from longevity risk”.

The current tax settings for the accumulation phase are appropriate, however, and should remain the same, the bank said.

“The embedded concessional tax rate framework is relatively simple to administer and also provides certainty in the context of overall government revenues,” said the submission.

“The Low Income Super Contribution for low income earners and the Division 293 additional tax for high income earners make this arrangement broadly equitable and should be maintained.”

The submission said contributions caps should be reviewed, however, to allow workers who are underfunded for their retirement to make additional voluntary contributions to catch up and improve their adequacy.

Westpac said this would include those with broken work patterns, migrants who have emigrated to Australia part way through their working lives, and workers who have had involuntary periods of non-employment, due to redundancy or ill health, for example.