Government super reform package clears Parliament

The Government’s superannuation reform package clears Parliament.

Government super reform package clears Parliament

The Turnbull Government’s superannuation reforms are now law, after Federal Parliament voted on Wednesday to accept the package of tax changes.

Treasurer Scott Morrison claims that the new package will limit concessions for wealthy savers, will give the budget a net saving of $3 billion and will make the system fairer and more sustainable for all.

Under the new rules, the annual cap on non-concessional contributions will drop to $100,000, until the lifetime balance cap of $1.6 million is reached.

And from 1 July next year, there will be a reduction to $25,000 on the annual cap on concessional super contributions.

Wealthy savers still have a chance to add three years’ worth of non-concessional contributions, or an extra $540,000, into super before the 1 July 2017 deadline.

Although Labor eventually supported the Coalition on the changes, Shadow treasurer Chris Bowen was disappointed that the Government didn’t prioritise retaining Australia’s AAA credit rating by accepting an extra $1.4 billion in cuts proposed by Labor.

"A Treasurer whose clear focus is on retaining Australia's prized three AAA credit ratings, would be working with all parties on all potential savings proposals," said Mr Bowen. "The Treasurer today chose to create new super tax concessions that largely benefit high income earners at the urging of the extreme right wing of the Coalition party room, over enacting further measures to deliver more budget savings.

"Assuaging the extreme right wing of the Coalition party room is a more important objective than securing Australia's triple-A credit ratings."

Labor argued that the ‘catch-up’ option would be used predominantly by men on high incomes, rather than women trying to top up their super after taking leave from work.

Although the Government claims the new system will be fairer for women, Finance Minister Mathias Cormann can’t prove it.

“You might want me to put a thumb in the air and give you a number but it wouldn't be honest,” he said.

Labor also said it would fight the Government on the rewording of the purpose of super. The Coalition’s current definition is “to provide income in retirement that substitutes or supplements the Age Pension”.

To help guide future direction of super policy, Labor wants to wants a definition of the standard of living afforded by the Age Pension, such as ‘adequate’ or ‘with dignity’.

Read more at The Australian Financial Review
Read more at Investment Magazine
Read more at The Guardian

Are you happy with the changes to super? Do you expect to benefit from the changes? What do you suggest for the rewording of the purpose of super?

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    COMMENTS

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    TREBOR
    24th Nov 2016
    10:44am
    ..and there shall be wars and rumours of wars over superannuation, yea, e'en unto the Seventh Generation.....

    ...until such time as a proper national superannuation scheme far removed from the grasping hands of incompetent and self-serving politicians is made a reality and set in stone...
    TREBOR
    24th Nov 2016
    10:46am
    Ye Gods! Numero Uno off the mark here in the Grande Republico of San Austrador, and as Minister to Ele President advising on retirement plans.... and the transporting of bananas....
    PIXAPD
    24th Nov 2016
    11:17am
    In Canberra they BEND bananas
    MICK
    24th Nov 2016
    1:16pm
    Love it.....but don't expect the rich not to put their men and women into government so that they get their mega dollars whilst the rest of the population pays. Happening as we speak.
    Old Geezer
    24th Nov 2016
    2:10pm
    Nothing wrong with our current superannuation scheme.
    MICK
    24th Nov 2016
    2:12pm
    Unless you are sucking off it there is a lot wrong with it. Wonderful for the top end who have been able to milk it for decades though.
    Old Geezer
    24th Nov 2016
    2:55pm
    Not too sure what sort of super you are referring to Mick but mine does very well thankyou. It is a great system.
    tendj
    24th Nov 2016
    5:33pm
    PIXAPD in Canberra they bend every thing
    Anonymous
    27th Nov 2016
    1:18pm
    Well, OG, that's all that matters. Nobody else counts! As long as OG is happy, the rest of the world can wallow in misery and hardship and go to hell.
    Old Geezer
    28th Nov 2016
    6:30am
    Don't tell me Rainey that you don't look after yourself because if you don't no one else will.
    PAYEdmydues
    24th Nov 2016
    11:27am
    Changes seem reasonable to me. Putting limits in place short make it fairer and minimise the rort allegations.
    Rae
    24th Nov 2016
    12:36pm
    Yes I agree and a very few must be getting a truly unfair advantage.

    With a median wage of $42000 that means a super saving of around $2500 a year for the average Joe and Jane.

    They don't understand how to stop all those opt out insurance fees and charges so after about 40 years they'd have $100 000 if lucky in super. Maybe a bit more if Mr Market has returned the 4%.

    So now the super has been fixed for the high income people I wonder if a wee bit of time could be spent on lifting those very low and stagnant wages.

    Then again some time would have to be spent on the bottom 60% and I can't see that happening any time soon. Can you?

    Fair is one of those four letter words to most people these days.
    MICK
    24th Nov 2016
    1:31pm
    This government is about lowering wages and conditions for workers, not improving them and higher taxes for workers. Higher remuneration is reserved for the top end of town.
    TREBOR
    24th Nov 2016
    7:38pm
    You forgot lower real tax rates, Mick, for the top end.
    Rae
    25th Nov 2016
    7:16am
    Isn't that the whole reason for the attacks on superannuation and retirees incomes. To claw back around 5 billion from older savers to pay for income cuts for high salary earners and corporations.

    They haven't got anywhere else to get the money.
    Rae
    25th Nov 2016
    7:16am
    Isn't that the whole reason for the attacks on superannuation and retirees incomes. To claw back around 5 billion from older savers to pay for income cuts for high salary earners and corporations.

    They haven't got anywhere else to get the money.
    floss
    24th Nov 2016
    1:24pm
    Don 't expect any thing from this born to rule mob.Super for working people is now a risky investment.
    MICK
    24th Nov 2016
    1:38pm
    And now this government is trying to push legislation through so that superannuation funds need to be staffed by commercial interests. This is despite (or rather because of) the much higher returns Industry funds make. Pretty clear that the industry is being taken over by the vested interests of the rich who will then drive down the returns to investors as they take large salaries which industry representatives do not. How corrupt is that!
    TREBOR
    24th Nov 2016
    1:56pm
    That's exactly the name of the game, MICK and Looney - all the average person is seen to be is a source of cash for a 'business' venture. It's all about putting self and mates into a position where they can pretend to be working hard while really copping a sweet salary etc for doing next to nothing - maybe attending five meetings a year.

    Beeziness is Good in El Grande Republica da San Austrodor!
    Rae
    24th Nov 2016
    2:02pm
    MICK if the commercial interests think they'll get the same fees as they currently are they will be in for a shock. Most low income earners don't even warrant that much in super a year.

    9% of the minimum wage after 15% tax isn't exactly a huge amount of money. That $98000 average final sum won't pay the extra fees.

    Imagine low income earners retiring owing fees and charges to the fund. A total joke really.
    MICK
    24th Nov 2016
    2:15pm
    Those who administer funds are in a position to set high fees for themselves Rae. You can bet your bottom dollar that retail managers will award themselves high salaries and then more again with performance bonuses. The path is well established and well trodden. Can't have any of those union types running super funds which have significantly better returns than retail funds can we now.
    Lescol
    24th Nov 2016
    1:58pm
    All I would note; in 25 years there have now been over 4,000 changes made to the supa scheme. Nothing like being able to plan for the future eh?

    cheers
    Old Geezer
    24th Nov 2016
    2:12pm
    It's easy your plan needs to be flexible and like everything else don't have all you eggs in the one basket. Invest outside super as well as in super. I only have about 10% of my assets in super.
    MICK
    24th Nov 2016
    2:19pm
    There have been a lot of changes but you need to understand that the system was not set up for the benefit of the average Joe. That was just the sales technique. The fact that workers now have nowhere near enough money in their accounts is testament to this.
    Changes need to be made to cut out corruption from the top and to fix problems. Of course governments of all persuasion now see super as THEIR nestegg and want their cut. The bigger the pool of money gets the more they want some.
    Renny
    24th Nov 2016
    4:31pm
    I don't think you have an inkling if doing it tough Geezer. Not many can do what you're advising. I'd suggest you volunteer to work in the working section of the community, maybe even a Union. You might learn something.
    Old Geezer
    24th Nov 2016
    4:55pm
    Nay I left that section of community decades ago as I wasn't working to make my boss rich any more. I know what it is like to work in such a community and didn't like it so did something about it instead of whinging. I'm now to old they would be frightened of having me any where near a workplace let alone let me work.

    I learnt enough decades ago to last me a lifetime.
    Rae
    24th Nov 2016
    5:31pm
    I think that is the secret OG. If you can't get a high paid job to create your own businesses. I did both. worked for the man and ran a business on the side.

    I do think a lot of people lack the education, will and energy to do much more than earn minimum wages.

    For them superannuation is a waste of money. Under a certain income level superannuation should not be compulsory or if it is it should be not for profit investment with minimum fees and charges and opt in only insurances.
    Anonymous
    27th Nov 2016
    1:30pm
    Self-employment isn't an option for everyone, Rae. And contrary to OG's nasty assertions, it has nothing to do with initiative or willingness to work. Lots don't have the educational opportunities. Many don't have the mental agility required to do more than routine work supervised by others. It's not laziness or lack of effort. It's just that they are born with brains wired a particular way. Then there are those who face challenges of physical health, have serious accidents that cause disability, or encounter family crisis that places high demand on their energy (such as having a special needs child or a chronically sick or disabled spouse). Self-employment requires a level of self-confidence, and folk from abusive backgrounds frequently can't muster the self-esteem needed to go into business for themselves. Then there is the issue of raising funds to start a business. For some, that's an insurmountable challenge.

    Of course OG will reply with some insulting and denigrating assertion that anyone who isn't privileged is ''lazy'', but anyone with a brain and eyes to look around them knows it's not true. But our society has become so self-absorbed and greedy, sadly, that few will even acknowledge, anymore, the problems experienced by those at the lower end of the scale. Everything is about more for the rich and privileged - and finding more ways to bleed stones to pay for the obscene greed at the top.
    Old Geezer
    28th Nov 2016
    6:29am
    Rainey everyone has their problems. That is life. I look around me and I see people who have had a dream run in life compared to me but not succeeded in life at all. Why? Most could simple not be bothered to do what it takes. If that isn't laziness then what is? Self confidence is also a form of laziness in that people use it as an excuse for doing nothing.

    I have a disabled son and even he has had success in life even though most people wrote him off years ago. HIs brain is wired differently to others so that's not an excuse either. I taught him that if he didn't ask the answer was no but if he did maybe it would be yes.

    Rainey you are full of excuses why not which to me is the ultimate form of laziness.

    I'm not privileged and never have been. Yes I designed and planned my life from an early age and now live it. I took lots of wrong turns along the way but that didn't deter me. Anyone can do it.

    Super and welfare are too different things. Anyone with $800,000 doesn't need to OAP but everyone should be able to put the $1.6 million into super. Welfare should only be available to those who need it not to those that it is nice to have. All OAP should be a debt to the government and paid back out of one's estate when they die. How else is it fair on those who provide their own retirement? That is the answer to your concerns about people scraping and saving.
    Dave R
    24th Nov 2016
    2:29pm
    The changes are a step in the right direction but the concessions remain far too generous for the very wealthy.
    Old Geezer
    24th Nov 2016
    2:59pm
    The concessions are way too low as people should be able to put $1.6 million in their super funds. If people can't do this then we will become even more welfare dependant in the future.
    Renny
    24th Nov 2016
    4:33pm
    Old Geezer. The age pension isn't welfare. And many don't earn 1.6m in their lifetime. You really aren't the common man are you?
    Old Geezer
    24th Nov 2016
    5:53pm
    Yes the OAP is welfare as it's not a pension at all. It welfare like the rest of Centrelink payments.
    TREBOR
    24th Nov 2016
    7:40pm
    Not it's not - been proven to you repeatedly but you choose not to listen... it's Social Security and paid for.
    Old Geezer
    24th Nov 2016
    8:44pm
    No it hasn't even been paid for as it is welfare paid out of current tax revenue.

    Stop putting a feel good spin on the OAP as it is welfare and nothing more.
    JCS
    24th Nov 2016
    11:32pm
    I have to agree with Old Geezer. The Age Pension is welfare. It is there is help support those who, for one reason or another, have not saved enough for their retirement. Age Pension is not a right. The taxes we pay do not give us a right to the pension. Taxes are used by the govenment to run the country( I accept that most of us feel they govt is not spending our taxes wisely ). Age Pension is not superannuation. If you want to have an income in your retirement, contriubte to super from when you start working. My first job over 30 years ago was in a government department. Contributing to super, from my pay ( and before the superannuation guarantee was invented) was a condition of service. When I left that job, I continued to contribute to super as I was used to managing without the money I contributed. When I retire I will be able to use my super to support myself. My entitlement is to that super, not to a welfare payment called the Age Pension. My late Nan never paid tax, was widowed at a young age & had 10 children. If we were to apply the common misconception that the tax someone paid entitles them to an Age Pension, my poor late Nan would have recieved nothing. Therefore, Age Pension is welfare.
    TREBOR
    25th Nov 2016
    12:03am
    OAP and all other Social Security was a part of tax revenue - read the links I've posted many times or do your own research - but the government chose to change the name of it and incorporate it as part of consolidated revenue.

    Changing the name of a stream that enters a river does not alter the fact that the stream's water still flows into that river.

    Thanks for coming - train harder and next year? Who knows?
    Triss
    25th Nov 2016
    12:34am
    The majority of ex politicians and judges etc have to be on welfare then because many of them have been retired for 20 plus years and any money they paid has been well used up which means they are being funded by the taxpayers.
    All of their unfunded pensions are being paid for by the taxpayers which means they are welfare recipients. So let's accept that and let their pensions be means tested through Centrelink.
    JCS
    25th Nov 2016
    7:22am
    TREBOR, the amount of Age Pension, or any other welfare payment a person receives, is in no way related to the amount of tax thqat person paid. The Government sets a rate of payment for eaxh of these benefits and pensions, and then the recipient is means tested.I do beleive that, in the past, the Government/Treasury, set aside a "bucket" of money to fund pensions but at some stage this was put into consolidated revenue. Even when the money was separate, the rate of pension paid to a person did not depend on how much tax that person paid. If that was the case,upon reaching age pension age, a high income earner would have received a far greater ratse of pension than someone on minimum wage. What about depednant spouses who had never worker? They didn't pay tax, so therefore they would get a pension.You can't say that their spouse's tax would have covered them. Age Pension is a welfare payment & the amount a person paid in tax has absolutely no bearing on their qualification to or rate payable of Age pension.
    TREBOR
    25th Nov 2016
    10:19am
    Point is TCS -that money was in the past collected specifically for the purpose of Social Security as part of taxation and was topped up from then consolidated revenue as required. Absorbing it into consolidated revenue pure and simple made of it a plaything for passing twerps with an agenda, and is what opens the door for them to vilify it as some kind of generous handout instead of a basic right, by attempting to label it as the demeaning US term welfare when it is Social Security bought and paid for.

    Triss - your comment on the immense 'superannuation' handouts to politicians and the like is pertinent - their handout is far and away higher and better compared to their input than the lifetime contribution of the pensioner, and thus clearly enters the realm of Social Security, or if you wish to define excessive Social Security as welfare - perhaps it is welfare. You are correct in saying that their handout should run out in proportion to contribution and they should go on Social Security.

    All of this is why I advocate - 1) the removal of that proportion of taxation for Social Security from the grasping hands of a Social Security Pension and the taxation at normal rates of all income over and above that.
    TREBOR
    25th Nov 2016
    10:21am
    Dang - that's:-

    1) the removal of that proportion of taxation for Social Security from the grasping hands of politicians, and 2) the payment of a Social Security Pension to all and the taxation at normal rates of all income over and above that.

    (hit the wrong button - Keyboarditis or occasionally Feline Participation Rate)....
    TREBOR
    25th Nov 2016
    10:28am
    You may think I am nit-picking over the difference between Social Security as a paid for Right (non ™) and Welfare ™ as some kind of privilege and a handout. The difference is that one is a Right - the other can be malleable in the hands of any passing ideology, and it is not I who am seeking to change the rules by twisting words. I am merely holding the line, as someone needs to do, against the despotism of governments.

    Triss - your comment on the lovely super funds for chosen ones shows that this example of retirement package IS a privilege and thus may fairly be viewed as Welfare ™, and thus perhaps should be malleable in the hands of any passing ideology... such as one that demands that there is an urgent need to bring such persons into the real world as it pertains to the majority not enjoying such privilege, for the simple reason that not doing so means the recipients of that privilege have no idea what is really going on and what needs to be fixed.
    Anonymous
    27th Nov 2016
    1:34pm
    OG is such a hypocrite! On the one hand he says people should be able to put more than $1.6 million into super or they won't have enough to retire on and will need ''welfare'', and on the other he says a homeowner couple with $815,000 in savings is ''wealthy'' and doesn't need a pension.

    Make up your mind, stupid. If $816,000 makes a couple ''wealthy'' and not in need of a pension supplement, then $1.6 million is an obscene amount of super and NOBODY should be allowed concessions on anywhere near that amount, let alone more.

    24th Nov 2016
    5:45pm
    I have no problem with the wording " to provide income in retirement that substitutes or supplements the Age Pension". As seniors are living longer, healthier lives than our forefathers for whom the Age Pension was designed, it takes more tax to cover the pension. If super doesn't replace or supplement the Age Pension then either the Age Pension will be reduced or those working will need to pay higher tax rates.

    As regards Labor's suggestion that the words "adequate" and "dignity" be included that is just to make somebody feel warm and fuzzy. "Adequate" is a subjective word that means a lot of things to a lot of people so is really meaningless. As to "dignity" I can tell anyone who wants to know that with "dignity" and $5.00, I can get a schooner at my local but I wouldn't like my chances without the $5.00.
    TREBOR
    24th Nov 2016
    7:36pm
    Is a politician's retirement fortune 'adequate'? I think so... Pensions should be the average of what they get....

    (how's that for an ambent claim?)
    PlanB
    27th Nov 2016
    8:02am
    Take a look at this scum in the photo and tell me you really trust HIM? I would not trust him as far as I could kick him UPHILL! The smirking Happy clapper
    Jacqui
    1st Dec 2016
    11:04am
    Our government thinks it is OK to bring in thousands of 4rd world people and expect the hard
    earning tax payer of this country to pay for it.
    I propose we examine the tragedy of our Australian homeless ( over 60000 ) in NSW.
    The huge numbers of elderly living below the poverty line.
    The huge expense of the 3rd world living off us gorging our generous Welfare System that
    is presumably paid for by the Australian tax payer as a safety net for those of us who have
    fallen in hard times and those of us too frail to work etc etc and not for the 3rd world to come to our shores of whom many will never work a gain.
    This is a forced 'REDISTRIBUTION' of our tax payers wealth! 'Theft' of our money to fund
    others in their 'from cradle to grave' retirement fund. Little wonder Australia cannot fund
    our Aged Homes where the elderly are being fed pureed party pies because their funding is
    so desperately inadequate. Now our government wants to accommodate the new arrivals
    of 3rd world in our 'Aged Care Facilities' that our Tax Payers paid for! The Australian
    Government is obsessed with handing over our hard working tax payers money as hard as they possibly can with absolutely no respect or conscience for this 'Redistribution' of Australians
    money. This government even made a donation to the 'Clinton Foundation' and we all know that is a enrichment fraud for the Clintons personally, hell…they even paid for Chelsea's
    wedding and her living expenses for a decade, out of the Foundation!
    There are many questions to be asked!
    There are many problems in Australia to deal with!