With the coalition now forming a majority government, attention is turning from who will run the country to what they might do. A topic that is causing much discussion within the coalition at present are the proposed superannuation reforms that were outlined in the May federal budget.
A quick recap
The main superannuation proposals are:
- Lifetime cap of $1.6 million in superannuation pension phase
- Limit of $25,000 per annum concessional contributions
- Lifetime cap of 4500,000 non-concessional contributions
- Reduction of income threshold for div 293 tax from $300,000 – $250,000
- Transition to retirement scheme: earnings in super fund to be taxed at 15%
The government’s proposed superannuation reforms do not have universal support within the party and are currently being debates; so what is the industry response? Here is what is currently being said.
National Seniors Australia
Superannuation changes are broadly fair but have been poorly communicated, says the consumer lobby for the over 50s.
Australians are still grappling with what the changes – from the $1.6 million tax-free limit to the $10,000 reduction in the concessional cap – will mean to them.
“National Seniors believes the super changes are fair,” said National Seniors’ chief advocate Sarah Saunders.
“Generous top-end concessions represent money better spent in areas like health and aged care. But rushing straight from the May budget to the noise of an election campaign was not the ideal way to ‘sell’ them. People have had very little time to unpack the changes and there’s been a lot of confusion.”
The SMSF Association is looking forward to working with the Government to find ways to either change or ameliorate the impact of the proposed superannuation changes on people’s retirement income strategies.
“We are on the public record as saying we believed the reduction in the concessional contribution caps were detrimental to the goal of encouraging people to be self-sufficient in retirement, and that the move to limit non-concessional contributions to a $500,000 lifetime cap from Budget night disrupted people’s retirement planning,” said Association Managing Director/CEO Andrea Slattery.
“But (we) have been heartened by suggestions that the Government is prepared to sit down and discuss these proposals.”
Industry Super Australia
ISA warns that the interests of members must remain front and centre of all discussions.
“We look forward to working closely and constructively with the Treasurer and Minister O’Dwyer regarding major changes to superannuation and financial services already foreshadowed by the Turnbull Government,” said Robbie Campo, Deputy Chief Executive of Industry Super Australia.
“In particular, the 2016 Budget reforms to make super more sustainable and equitable must remain a legislative priority in the next sitting of the new Parliament.”
GetUp has announced that it will hit back against hard-right Coalition members bemoaning reform of Australia’s system of super tax concessions, intending to campaign for the changes to go even further.
“Liberal MPs, who represent some of the wealthiest electorates in the country, need to get some perspective”, said Natalie O’Brien, GetUp Campaigns Director.
“The proposed lifetime and annual caps are baby steps in the direction of a more balanced system of tax concessions – but we’ll still see billions of taxpayer dollars given to wealthy individuals that don’t need them.
The Australian Institute of Superannuation Trustees (AIST)
The AIST and its membership of not-for-profit super funds were generally supportive of the Government’s Budget policy proposals as a step towards improving the sustainability and fairness of the super system.
“The Government’s recognition of the need to support low income earners in saving for retirement is very welcome as are measures to better target super tax concessions, however the industry has some concerns about complexity and implementation,” said AIST CEO Tom Garcia.
Mr Garcia said AIST looked forward to working with the Government on its retirement income reform agenda and its commitment to legislate an objective for superannuation.
“The move to enshrine super’s objective in legislation is much needed but more work is required to ensure this objective provides clarity – rather than more confusion – on the purpose of super and its role with the Age Pension,” he said.
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