Nothing fair about these changes

Treasurer Scott Morrison has delivered his first budget and despite promising it was, in part, to “assist older Australians by making super fairer”, the reality is that retirees and pre-retirees will see little or no benefit. In fact, the break from the norm of ‘grandfathering’ superannuation changes may mean that any savvy retirement planning they have undertaken could now be blown out of the water.

There is no doubt that this Government sees it as an individual’s responsibility to plan, fund and manage their own retirement. Not only has it implemented legislation that puts the onus to check a financial planner’s credentials firmly in the hands of individuals looking to engage their services, it has also done little to stop the systematic fraudulent practices of financial planners associated with the big banks.

In addition, it has proposed laws that will seek governance changes to industry super funds – some of the top performing funds in Australia and those used mostly by ordinary workers on low or middle incomes. The proposals require that a third of trustees on the board of a super fund should be independent. But the flip side is that it removes the requirement to have employers and members represented on retail super funds and reduces the Government’s obligations on these funds, many of which are operated by the big banks. Do you see the connection?

While on paper it may look as though the Government has finally done something to stop the rort of superannuation by the wealthy, the immediate implementation and back-dating of two of the measures could seriously affect the plans of those retirees who have successfully planned for retirement.

Firstly, putting a cap of $1.6 million on the amount of money that can be transferred into tax-free retirement phase accounts is fair enough – $1.6 million is a lot of money. But having it take effect immediately without giving people the chance to review their plans and expecting those who have already transferred more than this to make arrangements to move the money elsewhere, is frankly ridiculous. If I was lucky enough to be a wealthy retiree, I would be taking the extra cash and parking it in property – with negative gearing untouched and no changes to the discount on capital gains tax in the foreseeable future, who wouldn’t? This will result in more pressure on the property market as well as adversely affect the Government’s forecasts.

Secondly, placing a lifetime cap of $500,000 on non-concessional superannuation contributions is a clever move for revenue building through the extra tax that will be paid. However, back-dating the inclusion of contributions made since September 2007 is unfair to those who have, over the last nine years, used the Government’s very own incentives to boost their superannuation.

Retirees and pre-retirees are already having to amend their retirement plans to accommodate the changes to the asset thresholds and the Age Pension taper rate that will take effect from 1 January 2017. To further throw their plans into disarray is just short sighted, especially by a Government that claims superannuation is ‘to provide income in retirement to substitute or supplement the Age Pension’.

Put simply, yesterday’s Budget 2016/17 has once again moved the goal posts and reduced retirees’ hopes of scoring any time soon.

Related articles:
Super changes for high earners
Fairer more sustainable super
Age Pension asset threshold changes
Budget 2016/17: Super changes for high income earners
Budget 2016/17: Reducing the tax burden
Budget 2016/17: Targeted welfare safety net
Budget 2016/17: Crackdown on multinational tax avoidance
Budget 2016/17: How will the new tax changes affect the individual?
Budget 2016/17: Government to invest a record $50 billion on infrastructure
Budget 2016/17: Scott Morrison on a fairer super system
Budget 2016/17: Making super fairer and sustainable
Budget 2016/17: What’s in it for retirees?
Budget 2016/17: Is that all there is?
Budget 2016/17: PM confident of re-election
Budget 2016/17: Bill Shorten rebuffs the budget 

Written by Debbie McTaggart

RELATED LINKS

Budget 2016/17: Super changes for high income earners

Treasurer Scott Morrison has swung the axe to make super fairer.

Budget 2016/17: Making super fairer and sustainable

Has Scott Morrison delivered on his promise to make super fairer?

Age Pension - asset threshold changes

Asset thresholds and the pension taper rate will change from 1 January 2017.

Budget 2016/17: Super changes for high income earners

Treasurer Scott Morrison has swung the axe to make super fairer.

Budget 2016/17: Reducing the tax burden

Tax relief is on the way for low and middle-income earners.

Budget 2016/17: Targeted welfare safety net

Stopping the Clean Energy Supplement is just one welfare measure.

Budget 2016/17: Crackdown on multinational tax avoidance

The Government has announced tougher laws to target tax avoidance.

Budget 2016/17: How will the new tax changes affect the individual?

How will the Government's 2016 Budget affect real people?

Budget 2016/17 – Government to invest a record $50 billion on infrastructure

The Government has pledged a record $50 billion for roads, rail, bridges and infrastructure.

Budget 2016/17: Scott Morrison on a fairer super system

Here's why the Treasurer thinks a fairer superannuation system is important.

Budget 2016/17: Making super fairer and sustainable

Has Scott Morrison delivered on his promise to make super fairer?

Budget 2016/17: What’s in it for retirees?

How does Budget 2016/17 shape up for you?

Budget 2016/17: Kaye asks “Is that all there is?”

There are two ways to review Scott Morrison's first budget.

Budget 2016/17: Malcolm Turnbull ‘quietly confident’ of re-election

Malcolm Turnbull is confident of re-election, saying he'll win off the back of the budget.

Budget 2016/17: Bill Shorten rebuffs the Budget

Bill Shorten last night gave his Budget 2016/17 reply speech.



SPONSORED LINKS

LOADING MORE ARTICLE...