Superannuation: which changes will be introduced

The much-discussed super changes will be introduced in to Parliament today.

scott morrison in parliament

Despite Bill Shorten’s call for tougher super tax measures to raise more revenue, the much-discussed super changes will be introduced in to Parliament today.

Treasurer Scott Morrison will try to secure passage of the bills to change superannuation legislation before Parliament rises for the end of year holiday. Announced in the Federal Budget 2016/17, the proposed changes have already undergone tweaks to help secure the support of Coalition backbenchers. However, as of yesterday, Bill Shorten was calling for a further change to the annual non-concessional contribution cap.

Currently, the cap limit is $180,000 per annum and the Government's proposed legislation will reduce it to $100,000. For those with more, no further non-concessional contributions can be made. Mr Shorten is calling for the limit to be further reduced to $75,000, a measure he says will raise a further $1.4 billion in revenue.

The Opposition Leader said that the Government had made a mess of the super changes and Labor had an eye on the bottom line,  “What we’re committed to doing at all times is improving the Budget bottom line,” Mr Shorten said.

“What we have learnt today is Labor has a secret super tax,” Scott Morrison responded, further adding on Twitter: “The super system needs to be improved, but to implement significant changes you have to be upfront with people.”

As a recap, here are the changes that the Government's proposed legislation will introduced today: 

  • $1.6 million cap on balances in retirement income accounts
  • reduce the income tax threshold on concessional contributions to $250,000
  • reduce the annual concessional contribution cap to $25,000
  • allow concession contribution of $100,000 per year for those with super balances of less than $500,000
  • increase innovation in retirement income stream products by removing regulatory barriers
  • Low Income Super Tax Offset, capped at $500, for those earning less than $37,000 per year
  • tax-free status of transition to retirement income streams removed

Are you any clearer about how the changes to super will affect your retirement income planning? If so, do you support or oppose the changes proposed by the Government? Do you think Bill Shorten's further change to be incorporated? Do you expect to be better or worse of if changes are passed?


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    COMMENTS

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    TREBOR
    9th Nov 2016
    11:33am
    I wonder how many who voted this lot back in are going to be weeping. Some say not many, and only the fatter cats, but it never seems to work out that way.

    **chews popcorn and awaits outcome**
    Old Geezer
    9th Nov 2016
    11:45am
    I'm certainly not weeping as they are the best we have at present.
    floss
    9th Nov 2016
    12:11pm
    The Greed is Good Party will only ever give the big end of town a slight nudge to make out they are doing their elected job, what a joke this corrupted party is.
    KSS
    9th Nov 2016
    1:00pm
    As I have said many times before I earn a salary far below the 'national average' of $80k. I am over 60 and currently take advantage of concessional contributions and TTR arrangements.

    I will be affected by two of the changes on the above list: the reduction of concessional contributions to $25000 a year (down from $35000) AND the removal of the tax-free status on TTR.
    Frankly this makes using super far less attractive even for people like me on modest incomes given it means it is no better than any other savings method (and may be a lot worse than some) and you still 'lock it up' for the rest of your working life. The real point is that it will make absolutely no difference to the top 10% (or what ever) that it was meant to reach. Rather, there will be many thousands just like me who are trying to be self sufficient in retirement but in all likelihood now won't be.

    Still I want to find out more about the proposal to allow concession contribution of $100,000 per year for those with super balances of less than $500,000. That may well be my 'get out of gaol free' card!
    Tom Tank
    9th Nov 2016
    1:25pm
    The "national average" wage quoted of $80,000 is more than the current median wage, i e the wage of the average person.
    People who are able to contribute $25,000 per year are actually in a very advantageous position compared to the average person.
    As has often been said Superannuation is intended to provide for a retirement of reasonable comfort not a means of building wealth.

    The benefits of the top tier of income earners are really out of line with community expectations. They are of course the ones who contribute most to the LNP.

    Lets not start on the outrageous Politician's pensions.
    KSS
    9th Nov 2016
    2:20pm
    Tom Tank you are not actually argueing your point well at all. And by the way which ever calculation you choose to use, I earn well below that amount (mean or average).

    I am in the position of being able to contribute $35000 a year i.e. the maximum for my age group currently ONLY because the loss of income is made up from the TTR. And by the way, that $35000 also includes the employer contribution. The main (and in fact the only advantage) is that I only have to pay 15% tax on the contribution and no tax on the withdrawal on the TTR. That tax saving plus the compound interest on the savings and then the (hoped for) increase in value of the investment is what allows the amount to increase more dramatically than putting after tax contributions in.

    The point being that these changes do NOT only affect the very wealthy at all. They affect those of us with far more modest means (but a will to sacrifice and go without) who are saving for retirement.
    Old Geezer
    9th Nov 2016
    4:19pm
    I agree the changes will not effect the wealthy only those trying to become self sufficient. Wealthy will just use other avenues to lower their tax.
    Rae
    10th Nov 2016
    7:11am
    Being able to save over a thousand dollars a fortnight because the taxpayer is propping you up is unsustainable in a society that pays no taxes much.y Where do you imagine the money is coming from?

    Your not the only one paying only 15% and often no tax at all.

    We are all doing it so of course there is no revenue to keep it up.

    Business is also spending all the profits so there is no tax happening much there either.
    ex PS
    10th Nov 2016
    10:19am
    I would rather contribute my taxes to people who are willing to invest their own money in a self sufficiency scheme than just pay it out to people as an old age pension.
    I do not begrudge people that need a pension the benefits that they are entitled to, but I do think that helping people that are contributing to a Super Scheme is a more cost effective option.
    The government needs to realise this and stop destabilising the Super market with constant illogical changes.
    Nobody in their right mind should invest in a retirement scheme that gives no guarantee that the conditions in place when signing up are going to be the ones applied when the policy is redeemed.
    Anonymous
    14th Nov 2016
    7:24pm
    Agree, ex PS, but how is anyone going to be encourage to invest for self-sufficiency when they have to somehow earn more than 10% on their investments just to equal the loss of the aged pension, and many are lucky to get 5%? Honestly, the best place for many retirees to put their money is under the bed! The entire system is hopelessly flawed, and this government clearly has no idea how to do other than make it much, much worse.
    MICK
    9th Nov 2016
    2:09pm
    The normal arrogance from this government.
    "Labor has a secret super tax"? Really? What is that?
    "Allow concession contribution of $100,000 per year"? So the rich who end up in the 49 % tax bracket due to high incomes then put $100,000 into their superannuation account (tax = 15%) and then the rest of their income is pushed into a much lower bracket. Come on guys let's tilt the tables again. Oh yeah......tax cuts for the rich as well. Coming.
    A annual $75 000 limit is exceedingly generous. If mad Morrison is fair dinkum (he is not) then he needs to accept this and get on with the job.
    We again see the ongoing Class Warfare at work. Never changes.
    Old Geezer
    9th Nov 2016
    4:28pm
    $75,000 is not good for those trying to catch up due to not having super until the 90s. $180,000 was about right especially with the 3 year carry forward rule.

    It is no good having a $1.6 million limit if people can't get to that level.
    MICK
    9th Nov 2016
    9:07pm
    Tell me about it. Been there done that.
    What is not fair is getting the well off there in a hurry and locking the bottom out altogether.
    ex PS
    10th Nov 2016
    10:25am
    OG, good point, if you have a $1.6 M limit, you should be able to meet that limit in any way you can. Yes it will mean that the wealthy will accumulate more wealth within the scheme if they put the $1.6M in at the very beginning, but this will not take one cent out of the pockets of the ones who take 40 years to meet the target.
    floss
    9th Nov 2016
    4:06pm
    Super for the man in the street is dead in the water . Fat Joe messed it up big time and then fled. Look what is going on in America and it will happen here if this Federal does not govern for all Australians.
    Old Geezer
    9th Nov 2016
    4:28pm
    The future of super for everyone has be all but destroyed.
    Rae
    9th Nov 2016
    4:47pm
    Yes OG, I agree, too many stupid changes.

    The non concessional deeming for defined benefit pensioners makes all non concessional amounts quite risky in my opinion. If they can do it for one group they can do it to everyone else surely.

    How would you like your non concessional portion to be deemed something entirely different from what it actually was?

    I wouldn't put non concessional money into super in a pink fit.

    Can you imagine them locking it in and deeming it any old percentage they like?

    You can't trust them. None of them.
    ex PS
    10th Nov 2016
    10:36am
    True, but it is not so far gone that it can not be saved. The first thing that needs to done is bipartisan support for a law that prohibits changes to the system unless both parties agree.
    It is a great shame because my Super has and still does work for me.
    JCS
    9th Nov 2016
    8:04pm
    I'm with you KSS. My husband, who is 56, has a TTR. We are each earning far less than the national average of $80K pa now( Hubby was earning a higher wage untul he was made redundant 8 years ago but secured onother job, albeit it on half the salary he was previously on). We both contriubte to super and always have, and intend to be self-funded retirees. As hubby is over 55 , he is using TTR as a means to increase his super in order to be self funded.We both contribute the maximum we can to super & use the TTR pension to give us enough income to live on now. As I am a few years younger than him I cannot access my super until I am 60. We are trying to do the right thing & aim to be self-funded & therfore not draw an Age Pension but these changes will affect our ability to do this. It will end up costing the Govenment as it is likely we will qualify, once we reach the appropriate ages, for a pension as we will have less super.
    TREBOR
    9th Nov 2016
    8:12pm
    Many short term fixed by government are merely postponing a Social Security 'debt' into the future.... it's very like shuffling Titanic deck chairs.

    The idea that unemployed people can take a hit for 'non-compliance', and that they must sell off their silver before they can get assistance, is doing nothing but postpone the inevitable reality that those same people will not - especially with the 'employment' market these days - be able to adequately add to any fun - super or otherwise - to generate for themselves any level of self-sufficiency in retirement. If they are forced to be asset-free (an oxymoron) and must perforce rebuild from scratch perhaps time after time - that ending is inevitable, and most such will - perforce - go straight onto a full Pension.

    I am not digressing here - the same applies to all the fiddling around with super and the cutting of this and that out - all it is doing, in reality, is postponing the inevitable reality that it is, in many cases such as yours, these policy adjustments that are themselves creating that 'future debt' to this country and its economy.

    Super rules need to be set in place, cemented there, and removed from the grasping hands of politicians, who themselves have zero idea since they are on Sweet Street when it comes to super.
    ex PS
    10th Nov 2016
    10:40am
    Do politicians not realise that every dollar that is taken out of a $1.6M Super Pension is a dollar not paid by the tax payer as a pension?
    This will make it possible for pensioners to get the entitlements due to them.