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The Latest On Superannuation

The Latest On Superannuation

SUPERANNUATION

Back in July after the Coalition won the Federal Election our own Christopher Zinn sent a letter to the PM on behalf of the FiftyUp Club. In it, Chris described the results of our survey which showed that 35% of you were worried by changes to super tax concessions.

The letter went on to say  “while our membership has in the past been supportive to some reforms there remains widespread confusion as to your proposals and their impacts.”

Fast forward to this week and David Crowe, writing for The Australian reports that Treasurer Scott Morrison is vowing to scale back the “extremely generous” tax breaks on superannuation, telling wealthier Australians to accept the changes while other people are also dealing with cuts that are needed to balance the budget.

The Treasurer hardened his message on the need to scale back the tax concessions saying “The tax arrangements for superannuation have been extremely generous and they were made extremely generous at a time when there was $20bn of surplus in the budget and $40bn in the bank.”

Speaking on 2GB this week Mr Morrison said “Now, the simple truth is going forward with the way things are globally and where the budget is at, those sorts of concessions can no longer be afforded.”

David Crowe writes “Mr Morrison persuaded parliament to accept tougher rules on the pension assets test when he was social services minister, scaling back the part-pension for thousands of older Australians in the name of budget repair.”

Reports this week suggest there’s considerable division in the coalition ranks as to the way the $1.6 million cap on retirement funds might work in reality. In addition the shadow of alleged retrospectivity continues to hang over the $500,000 cap on non-concessional contributions.

The one area our members, who come from both sides of the political divide, would agree with is that making super fairer for those with far from flash balances is a good move.

But they might also warn that changes to superannuation rules and concessions should only be well-considered, rare and subject to industry and consumer consultation.

It now appears the edicts handed down on super in the May Budget, and then taken straight to the election, will be subject to much-needed scrutiny and discussion as to their effectiveness.

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Robert
Robert from NSW commented:

The superannuation changes are unfare and what's more a big issue regarding these changes seems to be overlooked by everyone. The reduction to $25k pre tax contribution unfarely penalises older workers who are getting close to retirement with small superannuation balances that have now reached a time in their life that they can afford additional contributions - this stinks If I had $1.6m or the ability to put $500k into super I would have nothing to complain about 

Someone
Someone from VIC commented:

Good grief team - stop pussyfooting around. Self funded means no drag on the government and should be treated with respect with no changes. If you have already retired there should be NO changes to anything. Why on earth would we agree to anything else. Need to resist forcefully especially against that idiot Morrison. 

Keith
Keith from NSW commented:

Get your hands off super or be prepared to pay everyone a pension and the same rules should also apply to the pollies if implemented. 

Ian
Ian from VIC commented:

Could these points be useful discussion points: 1. A $1.6 million cap per person, or $3.2 million per couple is more than generous, provided the rules are changed to allow couples to equalise each others superannuation up to this limit. 2. The lifetime cap per person should be the same, $1.6 million per person. It shouldn't matter whether it is accumulated through concesssional or non-concessional means. That allows small business owners and farmers to sell their assets when they retire and not be disadvantaged; the $500K lifetime cap is the unfair component that is also effectively retrospective. Making it the same $1.6 m. figure per person should make the retrospective argument irrelevant. 3. With these caps in place, a person should be allowed to put up to $100K per annum into superannaution until they reach the cap. This sort of concession is still tiny compared to the concessions that politicians and public servants receive from the taxpayers of Oz. 4. Politicians and public servants superannuation payments and benefits should be taxed in exactly the same way as all other taxpayers are, i.e. the country viz. we the taxpayers, can't afford to be paying them based on 75% of their final salary, as this bears no resemblance to whether the money that should have been set aside and invested in their super scheme has earned enough to fund that level of income. 5. If this can't get over the line, then politicians and public servants super retirement payments must be capped at $80,000 per annum per person, which would equate to an average 5% p.a. return on $1.6 million of public funds. No public servant (incl. politicians) should have tax free income above that amount. If their salary package exceeds this amount, then it must pay tax at normal rates, the same as the rest of taxpayers. 6. The extra tax gained from #5 will help offset or even balance the cost of #'s 1 to 4. Then we may be able to start talking about what's fair and what's not fair in superannuation. 

Susan
Susan from QLD replied to Ian:

Agreed on that, but for it not to be retrospective, that regardless of the decisions and amounts is the sticking point and totally unacceptable. 

Someone
Someone from QLD commented:

I believe that Super should be left alone. It is only at this time in my life at 57 am I able to afford a reasonable salary sacrafice but will I be able to continue rhis with the proposed changes. I am female, single and currently working seasonal job. Trying to be self funded. And playing catchup. If the proposed changes get the go ahead I will no doubt be fronting up for the pension at some point rather than not at all. AK Qld 

Someone
Someone from VIC commented:

What about scaling back Politicians generous super and benefits, after all they are the ones that wasted the surplus and lets not forget the futures fund. 

Glenn
Glenn from NSW commented:

My concern with the changes to super is the 15% tax on my transition to retirement pension. This will cost me approx. $8,500.00 a year in tax, plus reducing the amount I can salary sacrifice from $35,000.00 down to $25,000.00 adds more tax. I think these changes will cost me Approx. $10,000.00 extra in tax a year and I am not on a high income. 

Deborah
Deborah from NSW commented:

Fine..if you want to mess with my super, then treat all super the same and that applies to all politicians past and present and lets see what happens then? 

Someone
Someone from NSW commented:

I am sick of Labour and liberal governments tampering with superannuation. I have had a SMSF since 2003 and worked very,very hard during my life so I can enjoy what years I will have left, I never went to University and I never got a first home owners grant from the government. My body is worn out at 59 and I will struggle to be able to work till I am 67, the retirement age that both labour and liberal have imposed on me by continually changing the gaol posts. I will not qualify for a pension, but I earned every dollar and have been spend thrifty during my life time and paid my taxes albeit at times I think too much. What reward do I receive for my hard work for this country, I only get governments who want to try and take it off me, money I am saving for my retirement so I can be comfortable in my remaining years and give it to those who think that welfare is their right and do not contribute to this country, its people, our children and our future. Superannuation is a very big basket of savings money for the Government and an easier target than stopping the bludgers and those not paying their fair share of tax. Start concentrating on reducing welfare to those persons abusing the system and stealing from hard working Australians like myself, my wife and my children 

Sjouke
Sjouke from NSW commented:

I'm a self funded retiree on a superannuation pension established several years ago. I built up my retirement nest egg by sacrificing salary in favour providing for my retirement and not being a burden on society. Now the Government seeks to tax me because that nest egg has grown above $1.6 mil. My wife's nest egg is nowhere near that but I can't transfer any to her. This in my mind is retrospective. Had I known this when I retired I could have put more in her name. Further, at best, the tax should only be based on the amount when the pension was established and not on the growth which has occurred over time. Clearly this is unfair compared to someone who establishes a pension now. 

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