Budget 2016/17: the goal posts have moved again

The reality of Budget 2016/17 is that retirees and pre-retirees will see little or no benefit.

Budget 2016/17: the goal posts have moved again

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





    COMMENTS

    To make a comment, please register or login
    Mike
    5th May 2016
    10:14am
    Bastards
    Ted Wards
    5th May 2016
    11:30am
    I second that Mike
    maxchugg
    10th May 2016
    12:01pm
    For once Q&A was worth watching last night. A lowly family man wiped the floor with the experts on the panel, most of whom were totally out of touch with pensioners and those on low incomes.

    Cassandra Goldie, introduced as the head of the Council of Social Services commented that the current government was cutting pensions, cutting welfare, reducing unemployment payments which had not in creased in decades, and transferring people from invalid pensions to unemployment benefits.

    Kelly O'Dwyer, Assistant Treasurer immediately demonstrated that she was suffering from the Joe Hockey syndrome, totally out of touch with people earning less than $80,000 a year, and argued that not increasing unemployment payments is not a cut.

    This stupid, out of touch comment ignores the obvious - If unemployment benefits do not keep place with inflation, that is effectively an income cut which can do nothing other than to take welfare recipients deeper into poverty.

    The poor in this country are being severely disadvantaged by the fact that their parliamentary representatives have been wealthy for most, if not all of their lives. They would not have a hope of understanding the point made by the lowly paid worker that a $7000 per year tax cut for someone earning $80,000 per year would make an insignificant difference to his life style. The same cut to people on the minimum wage could be the difference between deciding whether or not the kids go to the pictures.

    The time has come when those on low incomes should be able to realistically aspire to enter the parliament, thereby ensuring that all sections of society have better representation than is currently the case.
    LiveItUp
    5th May 2016
    10:39am
    I'm glad it wasn't grandfathered after what has been happening before the budget. People were shoving whatever they could into super so they would not miss the boat so I'm glad it sailed back in 2007.

    I do however think the lifetime $500,000 concessional contribution is a bit low especially for those who have minimal super and are trying to catch up by selling their business or get an inheritance.

    The $1.6 million seems fair to me.
    Fliss
    5th May 2016
    1:06pm
    Cap of $500,000 is on NON-CONCESSINAL contributions - Debbie is incorrect.
    But do agree with your comment Bonny. Many people would be intending on selling property, businesses, etc & after capital gains tax, etc to put proceedes into super'n.
    I really don't understand the gvt's thinking on this move.
    BJ Moose
    5th May 2016
    2:56pm
    Whenever I read your posts I sometimes wonder if you have missed the 'r' out of your name...
    Debbie McTaggart
    5th May 2016
    2:57pm
    Apologies Bonny, a typo on my behalf, should be non-concessional and as been amended
    Fliss
    5th May 2016
    2:59pm
    Bonny didn't comment on it Debbie, I did.
    Retired Knowall
    5th May 2016
    4:51pm
    The $500K cap does not make sense if the Govt wants more people to be self funded.
    Existing Super accounts will not be effected, my understanding is
    If an individual has exceeded the cap prior to commencement they will be taken to have used up the lifetime cap but will not be required to take the excess out of the superannuation system.
    The estimate is that less than 5% of super accounts will be effected.
    Fliss
    5th May 2016
    4:57pm
    I agree Retired Knowall that the $500K cap is illogical when the aim should be to encourage people to be self funded.
    I have hit the cap already but did intend adding more as I sold off investment properties. I wanted to channel all proceeds into super for the tax free environment. :(
    Tom Tank
    5th May 2016
    11:01am
    While the mild changes to superannuation by winding back some of the Howard/Costello generosity to the wealthy is welcome the overall effect of the budget is still to cater for the top end of town.
    The LNP have consistently waged class warfare by catering for the well-heeled. this is understandable since these are the ones who finance the LNP. Unfortunately it has not in the best interests of the majority of Australians.
    It is therefore a bit rich for ScoMo, and his compatriots, to accuse others of starting a class based war when it has been waged since the beginning of Capitalism. Don't get me wrong because Communism is no better.
    Rae
    6th May 2016
    9:05am
    The winners of capitalism only ever get upset when the losers catch on and use the same strategies.

    You can't beat them you have to join them and the competition drives them nutty.
    Alexii
    5th May 2016
    11:13am
    Given that most Australians are not wealthy and that most workers get less than the average wage, I fail to understand why so many continually vote for the LNP coalition. For instance i know some such people who seem to think the sun shines out of a certain part of the anatomy of those in that party. Ah well, it is a democracy, isn't it and they are there to look after the interests of all of us. It's just a bit of a shame that the interests of the wealthy and the big corporations come before the interests of most of us. But again, that's democracy in action.
    Rae
    5th May 2016
    4:17pm
    It is easy to understand. It is like supporting a football team and never being clever enough to see their faults.

    I support Parramatta and just when they come good we find out they cheated.

    Political parties are the same and the supporters mindlessly follow regardless of any reality.

    5th May 2016
    11:27am
    Backdating the $500,000 cap to 2007 is patently unfair. It means people who carefully planned their retirement are going to now be slugged yet again, and many of those affected will be among those slugged with the cruel assets test change. It seems this government won't be content until it has ground all but the very rich retirees into poverty.
    KSS
    5th May 2016
    1:20pm
    But Rainey surely if you have contributed half a million dollars in super you are RICH aren't you? Because only the RICH could have done that right?

    Or does that amount affect you and so you change your tune?
    MICK
    5th May 2016
    2:28pm
    "The most common types of concessional contributions are employer contributions, such as super guarantee and salary sacri?ce contributions."

    KSS: The rich do contribute the maximum permissible. Very few working Australians can afford to do that.

    Tax relief from superannuation contributions disproportionately favours those in the top tax bracket. Again...the rich! What part of that do you not get?

    I agree with you Rainey. It's gone a long way back. The ATO only goes back 6 years so this is a precedent.
    Rae
    5th May 2016
    4:22pm
    Why anyone tells them the truth or plays by the rules is the odd bit Rainey. If Hockey can do what he did then the rest of us need to lift our game in the gaming the system stakes.

    Keep your money out of their silly system where you have some control. Anyone putting more than the bare minimum compulsory into super needs their sanity examined as far as I can see. Too much sovereign risk and this budget is just one more example in a long line of budgets that have gone before.
    Retired Knowall
    5th May 2016
    4:53pm
    Existing Super accounts will not be effected, my understanding is
    If an individual has exceeded the cap prior to commencement they will be taken to have used up the lifetime cap but will not be required to take the excess out of the superannuation system.
    The estimate is that less than 5% of super accounts will be effected.
    Anonymous
    5th May 2016
    6:18pm
    Fortunately, none of these measures will affect me. I'm too poor! But I don't agree with telling people ''these are the rules. Plan and save for your retirement accordingly'' and then making sudden or backdated changes that pull the rug out.

    The assets test change left thousands of part pensioners in no-man's land, with no options to adjust their circumstance because they have already settled in their choice of retirement home, and it's too late for them to take advantage of the 5-year gifting rules.

    The super changes fortunately only impact on the much better off (unlike the assets test that hit people with relatively little - despite the lies that it ''stopped millionaires getting pensions'') but the principle is disturbing. When governments start assuming the right to change the rules on a whim, backdate changes, or give unreasonable notice periods, retirees can have no confidence in their plans. They have enough worries without their retirement budget being repeatedly shot apart unfairly.
    Fliss
    5th May 2016
    9:44pm
    Exactly Rainey! Planning under certain rules & then having them change is not right! For over a decade we've been told that upon reaching 60 years of age & putting our super fund into pension faze, that all earnings in the fund would no longer be taxed. But last night that rule was changed. Wrong! :(.
    LiveItUp
    5th May 2016
    9:54pm
    I agree with backdating it back to 2007 especially since what has been happening with people putting as much as they can in lately in expectation that it would be grandfathered. It doesn't take an expert to work out who can afford to generously top up their super to take advantage of this.

    As I haven't put anything into super since the early 1990s then I could put the full $500,000 now or leave it a few years and put more in as it is indexed up providing I can get it in under the cap. However super is only really a tax shelter for me now so my other investment earnings will need to be taken into account in deciding whether to add more money to super. I like the idea of being now able to add more up until 74 without having to satisfy any work tests.

    Another tax strategy filed away until it's time of need.
    Fliss
    5th May 2016
    11:09pm
    Don't think this forum is so much for discussing one 's personal situation but rather the proposed changes as listed in last night's budget, Bonny.
    Re the cap of $500K, just seems silly - to have no cap encouraged people to put as much as possible into super (although there was a $540k cap for every 3 years), thus ultimately being self funded. Anything that discourages people from topping up their super to the max seems to be encouraging the opposite. There need to be tax advantages for contributing to super or no one will bother!
    Fliss
    6th May 2016
    9:12am
    I agree Rainey - but Labor's proposed changes are worse!!!!
    Rae
    6th May 2016
    9:12am
    Yes Bonny the change in age rules is good for me too if I can see any benefit to putting money into super instead of keeping it outside which suits me.

    I also like the 10% tax offset rising to 16% for self employed. That might encourage some of the young to go out and do something.

    Not sure about the tax on lump sum withdrawal and deceased estates as I haven't really understood those implications yet.
    Mike
    5th May 2016
    11:27am
    You people don't get it. Do you? The very wealthy are untouched. They are above it all. None of this worries them. The low end of town, those that drank and smoked and played the pokies and generally enjoyed themselves, they are looked after and rewarded. NO, the Liberals are targeting the middle class, those that worked hard and saved and put a little away for their retirement. Its always the middle class that pays and is targeted. Well more and more middle class are now staring to realise that the Liberal Government is full of liars and cheats and rorters, only thinking about filling their own pockets, like Hockey and Bishop, and I believe there are now enough middle class voters to put Turnbull where he belongs, as far away as possible.
    Anonymous
    5th May 2016
    6:20pm
    I get it, Mike, and I hope your last sentence proves a true prediction.
    LiveItUp
    5th May 2016
    9:57pm
    I do get it too. The biggest problem is that if you try to penalise the wealthy then it usually hurts the poor more. That's the way it has always been.
    MICK
    5th May 2016
    10:19pm
    The rich man's explanation Bronny. Pull the other one.
    Rae
    6th May 2016
    9:25am
    Yes Mike it always has been. There is nothing you can do about the very few rich people at all.

    Worry about yourself and how to manage your finances to make your life the best you can is my advice.

    The rich are a class on their own.

    There is not one party that care about you. I do believe the ALP are better at providing health and education but they do it by increasing debt levels every time not by good management.

    The LNP are not great economic managers either though are they?

    Neo liberal ideology targets the middle class as it sees them as an aberration caused by the creation of the welfare state and a waste of resources that would be better channelled into the hands of the Leaders of Capitalism. Those hands are supposed then to provide for the rest of the peasants in a loving and caring fatherly way.

    Of course it is a nonsense as we know how greedy, and unable to feel any compassion nor empathy these people are.
    Just the way Gina treated her own kids is a wake up to the type of sharing we can expect.

    We need to help ourselves as the rich won't.
    older&wiser
    5th May 2016
    11:58am
    At age 63 I work in a low paid job but have been heavily salary sacrificing to try and save for retirement. Once again they have changed the goal posts and I despair of ever being able to stop work and not live in abject poverty. Why wont they stop destroying people's plans? I have small amount in Super and am getting sick and tired of constantly having to pay a Financial Advisor every time they change the rules. The only retirees they are interested in are themselves. Bloody fed up....
    Fliss
    5th May 2016
    2:07pm
    Agree re them changing the goal posts! Not right!
    But stop paying a finance advisor! Just read a summary of changes yourself - is not hard to follow.
    Super is till a great place to have your money. Salary sacrifice as much as you can afford (up to maximum of $25,000 together with super guarantee contributions). Can make lifetime non-concessional contributions up to $500,000 maximum. Nothing else to worry about - until you hit 1.6 million in the accumulation phase of your super.
    Retired Knowall
    5th May 2016
    4:58pm
    Spot on Fliss, my only comment is to make sure you diversify your portfolio. Super is a great tax minimisation tool, but, it is subject to great Sovereignty Risk. Just look at the number and depth of changes over the last 20 years.
    Fliss
    5th May 2016
    5:08pm
    Yep Retired Knowall. Agree. It is a great tax minimisation tool. And the number of changes is mind blowing!!! And re finding secure diversified investments - they are getting harder & harder. Every time I have tried something different I have lost!
    LiveItUp
    5th May 2016
    10:00pm
    Tax free super income is great but you also have a personal tax free threshold depending on your circumstances that can be used without the restrictions placed on super.
    Fliss
    5th May 2016
    11:00pm
    True, but only $18200.
    Rae
    6th May 2016
    9:30am
    It is about $33000 tax free threshold for a retiree Fliss.

    You need to check out the changes to lump sum withdrawal and deceased estate rules too. I haven't quite wrapped my head around the jargon on those two but changes have been made that will begin next year.

    I'd be careful putting all your eggs in the one basket especially a basket so fraught with legislative changes.
    Fliss
    6th May 2016
    9:38am
    Thanks Rae. I'll look into it.
    I'm not considered a retiree . . . yet. Am 59 & draw an income from our business. Am using TTR (for it's tax benefits - big ones were to happen next birthday! LOL - not happening now. ;) ).
    But will look into your $33,000 V $18,200. Thank you!
    p.s Am still hoping changes won't get through both houses of parliament.
    Rae
    6th May 2016
    12:54pm
    You may be lucky Fliss as the letter my accountant sent documented a tax cut from 5% to 10% for self employed rising to 16% in years to come.

    I agree with the changes to TTR as it was a tax minimisation costing too much in lost taxes and wasn't available to everyone.
    Fliss
    6th May 2016
    1:49pm
    Thanks again Rae. I'm not considered self employed - I still am a PAYG employee of the company - discretionary trust.
    I do see your point re the TTR costing the gvt in lost taxes, but it's hard when the apple was dangled in front of your eyes for nearly 10 years & then it's taken away just 7 months short of getting the use of it!!! I've been planning our finances around it for the past years.
    Supernan
    5th May 2016
    12:01pm
    My question for the Gov would be- yes you gave Retirees time to plan to cope with the taper change to asset values - but once retired, now in mid 70's & on a part pension with a small job one cant do for much long, how does one plan ? Work until 90 ? Withdraw any savings & hide it ?

    If Super is meant to replace the age pension, what about self employed people - most cant afford super. If they employ people, they have to pay the employees super ! Which makes it even harder to afford their own super.
    MICK
    5th May 2016
    2:31pm
    This government wants retirees to spend everything, leave nothing to the next generation and be destitute before they die. The maybe they have to sell their home and live in a tent. Only then may they qualify for a pension. The government of the rich which have no empathy for average Australians and who want it all for themselves.
    Anonymous
    5th May 2016
    6:24pm
    They DID NOT give retirees time to plan to cope with taper rate changes. For someone retired or less than 5 years out from retirement, gifting isn't a viable strategy. For those who are already settled in their retirement home and don't want to move, upgrading real estate isn't a valid strategy. What's left? Cruising? Gambling?

    Marital separation or divorce might be an option for some. But there is very little an affected retiree can do to circumvent a devastating loss of income. There WAS NOT enough time allowed to adjust anything.
    LiveItUp
    5th May 2016
    10:04pm
    If the pension means that much to you then you have to use your money on something for yourself down to a level to where you qualify. Personally I'd be glad that I had enough not to need the pension instead.
    Rae
    6th May 2016
    9:37am
    Take the cruise Rainey. Go relax, see the world. Live a little as there is no way you can give it away. You can gamble it away though. Perhaps a game of poker with the kids would do it if you are so inclined and as Bonny said that Centrelink thing is important to you.

    Personally not even needing to know where the government office is is an amazing freedom.Worth fighting for and working hard to maintain.

    There is also the family trust strategy if you have enough money but only an accountant can advise on that one.
    Fliss
    6th May 2016
    1:51pm
    You are right there Supernan - about self employed finding it hard to pay their own super. I'm sure MANY small businesses have had to shut down due to the high cost of having to pay employees' super'n payments.
    Anonymous
    10th May 2016
    9:24am
    Why does everyone assume I speak from personal interest?

    Bonny, my concern is for the nation's taxpayers, and for those very many folk who DO NEED A PENSION to get through 30+ years of retirement with increased needs and are being denied the opportunity to preserve a reasonable amount of savings for the future.

    It's NOT ABOUT ME. It's about the fact that the changes were cruel, unfair in the extreme, and discourage responsible behaviour and thus increase the burden on taxpayers. But the selfish just don't get that. All Bonny ever talks about is her own situation and how pleased she is to see others suffering. What a sick mentality!
    Fliss
    10th May 2016
    1:02pm
    I have noticed that too....... certain person seems to only want to talk about her personal situation. That is of no interest nor benefit to anyone. This forum should be for general discussion & sharing of views.
    BILL5131
    5th May 2016
    12:05pm
    Lets send them a message. Do not vote for any party playing with super. That 500K limit is tricky! Mike I agree entirely!
    LiveItUp
    5th May 2016
    10:04pm
    Labor is playing with super too.
    MICK
    5th May 2016
    10:18pm
    But the government is playing with the minds of voters.
    MICK
    5th May 2016
    12:41pm
    Certainly not much in this budget for other than the rich. Did you expect other than this Debbie given the past 2 years of attacks on working Australians?
    I find the attacks on the management of superannuation directors an abomination. If a Industry fund is outperforming a Commercial fund then why should this government tamper with that? Answer: the commercial directors want to get in and shove their snouts into the corporate feeding trough so that they can rip as much money out of super funds as is humanly possible. In the end the members will pay and the returns for the fund to superannuants will fall.
    Perhaps fund members need to demand that union directors become mandatory on every commercial board. Yes....rules for some (different) rules for others.
    KSS
    5th May 2016
    1:23pm
    Because as the ICAC proved Union Directors are beyond reproach with other people's money!
    MICK
    5th May 2016
    2:34pm
    Industry Funds outperform Commercial Funds. What part of that do you not understand? If that is the case why replace well run funds with commercial cronies wanting to suck the blood out of the earnings of the fund?
    The ICAC proved nothing of the sort. Methinks you mean the Royal Commission into the Opposition KSS.
    We need a FEDERAL ICAC. Are you up to it? Speak up. Can't hear you KSS.
    KSS
    5th May 2016
    2:53pm
    No I mean ICAC in NSW although you are quite right to include the Royal Commission and union officials as well. Just proves my point about the (un)suitability of Union Directors being mandated onto commercial boards.
    Anonymous
    5th May 2016
    4:16pm
    OK MICK, place me in the category of "I don't understand" when it comes to the argument over whether Industry Funds outperform Commercial Funds. I rely on the Australian Prudential Regulation Authority (APRA) to help me out on my decision making and their report shows that no individual fund stayed on top of the league table across one, five and ten-year periods. Equally, the biggest funds – industry or retail, didn’t always score the top returns. It seems that they are about equal when it comes to returns to the client.

    Please don't start digging into the nuts and bolts of the various schemes to try and bolster your argument. It is a given that Union Funds charge lower fees but Commercial funds have more extensive range of investment options which generates a higher return which more than offsets the fee structure. The best that can be said about the difference is that there is no negligible difference overall.
    Rae
    5th May 2016
    4:36pm
    Glen Stevens came out and told us in black and white that the promises of superannuation and retirement were dead and buried basically.

    He stated that we would never achieve the promised returns and if you read between the lines there will be no nice self funded retirement for any of the ordinary people.

    For goodness sake people they are selling 100 year debt at 1.70 %.

    Stop believing the nonsense of it all.

    The argument of which funds are marginally better when they are all losing money is crazy.

    Look to the markets. That is where your money is at.

    I invest directly in them and I keep up and I made $60 this last quarter. Yep $60.

    Bonny keeps saying we will have to spend the capital and she is right. At least I didn't lose any capital but I bet my super fund did.
    MICK
    5th May 2016
    5:31pm
    Rae: the future is quite uncertain for all of us. I follow a few soothsayers and there are many well credentialed people who are saying that the financial system may well collapse. Many have for years described it as a giant ponzi scheme. Maybe they are right. Who knows.
    All I can say is that investors are not going to live off bank interest as you have correctly indicated that rates will be low for some time to come. But then things can also change very quickly as well. As always people need to have a range of investments as usually not everything goes sour at the same time.
    Rae
    6th May 2016
    9:48am
    I wasn't talking bank interest MICK. I don't invest in bank term deposits at all.

    Rates might be low until the end of the century.

    I was talking my bonds, international and aussie share funds and property. They appear to all be going sour together as far as I can see. The cycles of the past are broken.

    The corporate body, insurance and maintenance this quarter used up the rents.

    Still it could always be worse as you said it could all collapse and take the capital with it.
    Fliss
    6th May 2016
    10:49am
    AS you say Rae, interest rates are at an all time low. But bonds, international & aussie share, industrials, property . . . . all are are going sour. I have invested in some of those mentioned & lost capital. :( So I do invest in term deposit type of structures - interest is dismal but my capital is safe. All in SMSF.

    5th May 2016
    12:53pm
    The goal posts are moved and the level of the field is changed by a whim of the government, and it is getting worse every year.
    Fliss
    5th May 2016
    1:02pm
    WHAT???? This article says . . ."placing a lifetime cap of $500,000 on concessional superannuation contributions is a clever move for revenue building through the extra tax that will be paid". This is totally incorrect - the lifetime cap of $500,000 is on NON-CONCESSIONAL contributions.
    Debbie McTaggart
    5th May 2016
    2:58pm
    This is an unfortunate typo Fliss that has now been amended. Apologies
    Rae
    5th May 2016
    4:40pm
    Fliss The changes that count non concessional contributions as income when drawn down now means that you are better off investing in index funds or saving in the bank directly. At least that way when you withdraw your own funds they aren't classed as income for the second time.

    It isn't double taxation but double income counting and only this nutty bunch of economic illiterates could have dreamed it up.
    beyond caring
    5th May 2016
    1:15pm
    the real damage to pension was the last budget.. and still pensioners don't know what's coming... nobody seems to realize that come Jan 2017 many pensions will drop considerable not by small $$$ but Thousands of $$$$ .. just because "they" say it the 'rich" that will be impacted by pulling the high end of assets back from $1.2m odd to $800,000 ,,people don't understand that this closes up the mid range of around $450 -$500 reducing your pensions by over $10,000 per year... how about that for a new year gift to pensions,
    Fliss
    5th May 2016
    1:27pm
    You are correct Beyond Caring. Many people just do not seem to realise that. And interest rates dropping as well. :(
    KSS
    5th May 2016
    1:28pm
    beyond caring but that leaves you with $400,000 in your super ($1.4m - $800,000 = $400,000) from which you could easily make up that $10,000 shortfall for the next 40 years even without earning any interest.
    thommo
    5th May 2016
    2:52pm
    You miss the point KSS..These changes to the assets test were made after the govt (Abbott, Morrison et al) made solemn promises at the 2013 election that they wouldn't make such changes.
    They deliberately lied their way into power.
    They can't be trusted to be truthful and honest again.
    These changes are a gross act of betrayal and treachery.
    Many retirees retired on rules current at the time, even encouraged by the govt, but then in the 2015 budget, Abbott and Morrison in collusion with the Judas Greens and the CPSA pulled the rug from under them.
    This govt will get its comeuppance at the next election when they will be discharged from government.
    Rae
    5th May 2016
    4:45pm
    I wouldn't be surprised if this causes a recession as fear can do strange things to markets and these markets are all very unstable right now.

    Yes KSS we will all have to spend the capital because the markets are not making money. It will flow onto main street and businesses will fail.

    The government could have issued 25 year bonds at cheap interest and avoided all the trauma that a cash flow drought will cause.
    Anonymous
    5th May 2016
    6:30pm
    KSS, firstly your figures ignore inflation. The loss grows every 6 month with pension rises. Secondly, most people who have $400,000 didn't save it so they could NOT get a pension. They saved it to have a better standard of living in retirement or to cover expected high expenses in later life. Now they are deprived of the benefit of that saving, and, in fact, offered a big reward to blow it all quickly.

    That sends a strong message that saving for retirement is a waste of time, so pensions costs will rise. That's the dumbest economics I've seen in a long time. And this from the people who boast about being ''good economic managers'' and ''adults''. Heaven help us if we had bad managers! They are IDIOTS!
    Lescol
    5th May 2016
    1:25pm
    Yet again we have short time decisions being made over an issue you spent years planning for! Their actions are legal but so too will be mine when I vote 2 July - anybody first and current government last.
    Culgoa
    5th May 2016
    1:37pm
    Plenty of comment on superannuation - nothing about those of us on the pension.
    Fliss
    5th May 2016
    1:59pm
    the big changes announced in the budget were concerning superannuation.
    Stof
    5th May 2016
    1:37pm
    Will someone please confirm whether it's Non Concessional or NOT??
    Fliss
    5th May 2016
    2:01pm
    Stof, Are you asking about the lifetime cap of $500,000?
    This is for NON-CONCESSIONAL contributions (i.e. after-tax contributions).
    Debbie McTaggart
    5th May 2016
    2:59pm
    Confirm it's non-concessional, a typo on my behalf, apologies
    Mike
    5th May 2016
    1:42pm
    Well said Lescol. But who to vote for. The Liberals such as Hockey and Bishop are proven liars and cheats and rorters with their snouts in your tax money. Shorten I have no confidence in, and he has lost any edge by not promising to reverse any of Hockey or Turnbull's moving of goal posts. The Greens I am afraid of. They don't call them watermelons ( green on the outside, red on the inside ) for nothing. So who is there to vote for?
    Hawkeye
    5th May 2016
    2:25pm
    Mike, it's very easy to vote to get rid a certain party (in this case the LNP)
    Simply grab the LNP "how-to-vote" card (they'll probably thank you and shake your your hand and tell you how wise you are), then walk inside and follow it to the letter BUT IN REVERSE.
    I call it un-electing.
    MICK
    5th May 2016
    2:35pm
    Funny. You forgot about giving the card back on the way out and telling them what you have done. Priceless!
    Lescol
    5th May 2016
    10:26pm
    who to vote for? current government last and anybody before them. The vision is to change the government. As well, the incomers are placed on notice cheers.
    jamesmn
    5th May 2016
    1:56pm
    these clowns cannot be trusted they are nothing but a pack of liars all they want to do is look after their mates as they are the ones that donate money to the liberals Barnaby Joyce should be held accountable for his helicopter flight and sacked the same as bishop was these liberals think they can do whatever they want to maybe they should rename the liberal party to the noddy party if you notice them in parliament they are always nodding their heads at everything that is said I say bring on the election and get rid of this corrupt government they don't know how to curb spending then try to hit pensioners and the lower paid Australians they have already been proved that their figures do NOT add up by many annalists get rid of the bastards and stick Barnaby Joyce in court for the chopper flight.
    MICK
    5th May 2016
    5:10pm
    On the money. I am hoping that Tony Windsor will be remembered for his past service and that the electorate will throw Barnaby out.
    Anonymous
    10th May 2016
    6:36pm
    A shame that Tony Windsor sold out his very conservative electorate (or at least they think he did) by supporting Labor to form government. I think it will be a long time before many in New England forgive what they saw as a treacherous betrayal of their trust. But I share you hope that he CAN topple Barnaby, Mick.
    ronnieb
    5th May 2016
    2:03pm
    Could everybody please use some other means of explaining taxable and non taxable rather than "concessional " or "non concessional". I have to sit down and work out which is which every time i read it so why not use plain english?
    Fliss
    5th May 2016
    2:10pm
    Concessional contributions are those paid by the employer, salary sacrificed, etc., so they are taxed when they enter the fund at 15%.
    Non-concessional are those paid AFTER tax - they enter the fund having already had tax paid on them. e.g. you sell a property, make $200,000 - you then pay personal capital gains tax on it & then put maybe $100,000 into your super fund. There is NO 15% tax paid on it by the super fund. It is a Non-concessional contribution.
    (I used to get very confused too).
    Marius
    5th May 2016
    2:20pm
    I largely agree with many of the thoughts raised. We, the people of Australia are trying to arrange our affairs so that we have sufficient resources for an adequate and hopefully a comfortable retirement. Whereby we allow for contingencies later in life, like additional medical and health services which we will need as part of the normal aging process. We plan for a 20 to 30 year time horizon. We need to send a loud massage to the politicians that changing the goal posts is NOT acceptable. This government should be voted out of office on this principle alone, as a clear message to all political parties. These policy changes doom the not-yet-retired populous to having inadequate super accumulations to meet all the retirement contingencies they need to provide for.
    MICK
    5th May 2016
    2:56pm
    Not really Marious. There are always options like real estate and equities as well as overseas investments in same.
    Superannuation is a minefield but the rich have done very very well out of a system set up for them to milk. No accident I would think.
    Sallad
    5th May 2016
    2:57pm
    Agree. This message should be conveyed in no uncertain terms to BOTH the major parties ... and ALSO the Greens. Continual messing with the goalposts is unacceptable. No wonder many of my friends are talking about voting for independents like Derryn Hinch, & the South Australian Senator Nick Xenophon who are starting up their own parties.
    MICK
    5th May 2016
    5:12pm
    Xenophon is one of the very few pollies who has credibility. He will be getting my vote and I hope he snares a whole pile of seats.
    But voters still need to ask where preferences are going.
    thommo
    5th May 2016
    2:44pm
    Debbie....Abbott and Morrison (and the LNP generally) in collusion with the Judas Greens and the CPSA (the organisation which is supposed to be looking after the interests of retirees), changed the age pension assets test after they promised on their mothers graves at the 2013 election that they would not make such changes.
    Many retirees made plans to retire in 2014 based on the rules current at the time, only to have the rug pulled from under them by Abbott & Co (including Turnbull), without warning and without even 'grandfathering' the changes.
    These changes are so unfair and iniquitous that they make one's blood boil, and th0se affected retirees will reek their revenge at the coming election.
    However, what has labor got to say about reinstating them? They need to stand up for retires on this issue especially.
    MICK
    5th May 2016
    3:01pm
    Not as though the LNP government led by Tony Abbott just lied about one thing only. Almost everything 'promised' was scuttled. And you still get a (very) few folk on this website trying to paint this government as wonderful?
    I pulled all of my super out early and bought a rental property amongst other things. Best thing I ever did. Whilst we do not have a flash life by some standards we survive ok and will continue to do so unless we have another GFC. Then we join many others in the frying pan.
    I feel for you. Hope you make out. Just remember who did this to you on June 2.
    Fliss
    5th May 2016
    2:53pm
    Bring back Tony Abbott!!! The former Prime Minister Tony Abbott, publicly stated that no changes to the superannuation tax system would happen — ever! In February 2015, the rumours began again that tax-free super for over-60s may be changed. The Liberals however drew a line in the political sand and declared that tax-free super for over-60s would remain indefinitely.
    MICK
    5th May 2016
    3:02pm
    Abbott promised a lot of things. Most were intentional lies. We do not need liars of this calibre in politics Fliss. Not in any Party.
    Fliss
    5th May 2016
    3:09pm
    Each to their own thoughts there Mick. I don't like to get personal where politics is concerned, but I did trust Tony Abbott on these points. I disagree with some of the changed proposed last night simply because it is unfair to change the rules when many people have been working for years planning their retirement using current rules. I know I have. :(
    MICK
    5th May 2016
    5:18pm
    Understand about changing rules. On the rare occasion they do need to be retrospective, but mainly when there is collusion between vested interests and governments...which produce legislation which is other than above board.
    Tony Abbott? I saw this man as being dishonest to the extreme. Intentional dishonesty, not a change of mind because of circumstances. And then he oversaw the attacks on working Australians: the "budget emergency" lie and the whole raft of new taxes (promised not to increase taxes before the election!) brought in for average workers.
    We may have to agree to disagree about Abbott. I have little compassion for the man who tried to turn the ABC into another business controlled mouthpiece for the rich and their interests.
    Fliss
    5th May 2016
    5:27pm
    Fair enough. But "whole raft of new taxes on working Australians . . . bought in for average workers"?
    MICK
    5th May 2016
    5:59pm
    Poor wording from me. Yes new taxes like co-payments and debt repair levy but should have mentioned the funding ripped out of institutions average Australians need like schools, universities, hospitals.
    Anonymous
    5th May 2016
    6:58pm
    Surely you didn't believe Abbott, Fliss??? He also said no changes to pensions, no cuts to health, no cuts to education... the promises went on and on. ALL BROKEN.
    Rodent
    5th May 2016
    3:23pm
    Hi Beyond Caring you are right to be concerned. Many posters , such as Rainey , myself and many others have often posted about this issue. I have said that it may come as a surprise to many ONLY when it actually happens in Jan 2017. There is plenty of info about the impacts of these changes freely available.
    beyond caring
    5th May 2016
    4:51pm
    Jan 2017 will be a black day for many retiree living off a part pension . what is becoming more and more obvious is that both of the major parties are using the Boomers as the easy targets for revenue recover... because that's what it is, finding ways to recover the tax $$$ the fools have spent without consideration of a fair go for all. Hear that if you mover some of your super funds into a Complying annuity that amount is not deeded by C'link and is exempt from your assets. If anyone know about annuities and if works would like to know.

    with regards to voting the old saying " cheat me once shame on you .. cheat me twice shame on me"... over the years I have voted for Labor and Lib's ... not again been cheated to many time to vote for either.
    Rae
    5th May 2016
    4:51pm
    Why do you think they made it 2017 when defined benefit pensioners lost out from 2016 but there are only 42000 of them and mostly Labor voters at that.

    Those affected from 2017 are LNP voters thus the deception.
    MICK
    5th May 2016
    5:23pm
    I am more thinking Rae that this government has found ways of taking the heat off itself and its blatant program to tax ordinary Australians more and give the wealthy big tax cuts. We saw Abbott try the taxes and Turnbull give the tax cuts.
    The Royal Commission into the Opposition (a la unions!) and then the attack on retirees are convenient methods to deflect attention from the main game.
    We need to vote the bastards out. That will end the game.
    Sundays
    6th May 2016
    8:15am
    That used to be the case beyond caring, but the rules were changed 1 January 2015 for anyone starting a new annuity. Sorry, but another change made by this government
    Rodent
    5th May 2016
    3:47pm
    This may be helpful to some

    By the statement below , it is only new contributions that exceed the lifetime limit post the budget night that will need to be withdrawn .
    Statement ‘
    Contribution caps reduced
    From 1 July 2017, the cap on concessional contributions will reduce to $25,000 a year for everyone, regardless of age. Currently the concessional contributions cap is $30,000 under age 50 and $35,000 for ages 50 and over.
    Individuals with super balances under $500,000 who don’t reach their concessional cap in a given year will be able to carry forward their unused cap amounts on a rolling basis over five consecutive years.
    A lifetime cap of $500,000 for non-concessional contributions has been introduced, effective immediately. This replaces the existing annual cap of $180,000 (or $540,000 every three years under the bring-forward rule).
    The lifetime cap takes into account all non-concessional contributions made from 1 July 2007. Contributions made after the Budget announcement that exceed the cap (taking into account all previous non-concessional contributions) will need to be removed or will be subject to the current penalty tax arrangements. However, there will be no penalties if the cap has been reached or exceeded prior to the Budget announcement (7.30pm AEST, 3 May 2016).
    Fliss
    5th May 2016
    3:54pm
    You are correct that if the $500,000 limit has already been exceeded (prior to 7.30 pm last night) then that is ok.
    But many people will have investment real estate or businesses that they intended selling in the future & putting proceeds into their super as non-concessional contributions. They will now be able to do this.
    Rae
    5th May 2016
    4:54pm
    Will those with businesses and housing in super funds be able to transfer it out or will they have to sell?
    Fliss
    5th May 2016
    5:04pm
    Oops! My last sentence above should have read "They will no longer be able to do this".
    And Rae, do you mean people with businesses & housing in SMSFs?
    You can't simply transfer an asset out of super fund.
    You can sell the asset within the fund & then draw out the proceeds as a TTR payment or a pension.
    MICK
    5th May 2016
    5:25pm
    Good post Rodent.
    Rae
    6th May 2016
    9:57am
    Thanks Fliss for your reply. Does a house inside a SMSF class as part of the cap though. Most houses are worth more than $500 000.

    What I really want to know is if this will mean a whole heap of houses and businesses being forced onto the market to follow the rules?

    If you can transfer an asset into a super fund why can't you transfer it out?

    Glad I kept my assets out of super.
    Fliss
    6th May 2016
    11:00am
    Hi Rae, if the house inside the SMSF was bought with funds already in the super fund, then it is fine - especially if ALL those funds weren't non-concessional contributions. If the house was transferred into the fund as a non-concessional contribution, i.e. transfer duty was paid to simply change the ownership of the house to that of the SMSF then yes there is the problem that the $500K cap has already been reached. But it doesn't have to be sold as the cap only applies from 7.30 pm on Budget night. It does mean that no more non-concessional contributions can be added to the fund as the cap has already been reached.
    So no, there won't be a whole heap of houses & businesses being forced onto the market because of this change in ruling.
    Re : "f you can transfer an asset into a super fund why can't you transfer it out?" Just like cash - when you put it into super it can't just be "taken or transferred" out. It must come out as a TTR payment or in pension phase. It can be sold within the SMSF environment.
    I too have NEVER bought assets within my SMSF. The rules for SMSFs are complex enough without the added complexity of buying assets within the funds - and borrowing is a nightmare! Would NEVER do that!
    Gee Whiz
    5th May 2016
    3:58pm
    There have been over 4000 changes to superannuation since compulsory super was introduced by the Hawks/ Keating government. And apart from the Howard/ Costello years every change has been to the detrimental to the super savers.

    Does anyone know how these changes affect the pollies super, and just how much do we subsidize them on their contributions to super. Someone told me it was six to one!
    Rae
    5th May 2016
    4:57pm
    Exactly why I see the sovereign risk in superannuation far outwaying any tax minimisation feature it offers.

    Just make money and pay tax if you can and in these markets it is easier said than done.
    Sallad
    8th May 2016
    12:53am
    Aha....the Pollies Super is another story. No Caps, No Limits. Their "Age of entitlement" sails along its merry way like a 'silvery moon'. Wonder how much tax they are exactly paying with their "Family Trusts" etc ???
    Not Senile Yet!
    5th May 2016
    5:55pm
    SACH THE LOT NEXT ELECTION!
    Put BOTH Parties Last!
    Remove these corrut parasites from OUR Parliament!
    I dare you All to Vote Independants into BOTH houses!
    Attack them back!
    Go on.....Stick it Right Up the Lot Of Them!!!!
    tactful
    5th May 2016
    6:08pm
    I love the new moves in the Budget. It will have no affect on those receiving any form of welfare payment.
    If you have $1.6 million or more then pay tax and such the heck up, you are far from doing it tough.
    If you could not get that amount to last you at least 10 to 15 years, then you are doing something very wrong.
    My hubby and I live on my $25,000.00 per annum taxed super and received $252.00 each per fortnight Age Pension.
    We live very well thank you, take an overseas holiday every 3 years, have Aussie holidays each year and do not go without what we need.
    If you cannot live on this amount then there is a problem with you
    CindyLou
    5th May 2016
    6:34pm
    Sweeping statements are somewhat offensive...individuals situations are very different. An example, council rates/house insurance vary greatly for differing locations.
    Anonymous
    5th May 2016
    6:36pm
    And how much will your income reduce in Jan 2017? Will you do as well on many thousand less? With all the pension benefits, I could manage nicely on your income, but it will depend on people's individual circumstances. The ''problem'' you refer to might conceivably be very high health needs, or a need for extensive home help or personal care because of disability. Judging others by your own situation is dangerous, tactful.

    As for $1.6 million lasting 10-15 years, it should last a lot longer, given that the returns should be enough to live on without touching capital. But that's where the huge inequity lies. It's okay for people who have $1.6 million to enjoy generous tax concessions, but a homeowner with $400,000 is deprived of needed benefits.
    MICK
    5th May 2016
    9:26pm
    I understand your position tactful. Only thing is you better not live a long life. That is where the attack from the government can leave you short.
    Anonymous
    10th May 2016
    9:19am
    BTW. tactful - you are quite wrong in your first statement "It will have no affect on those receiving any form of welfare payment."
    Freezing the Medicare rebate will certainly have an impact on anyone on welfare. The number of doctors and specialists who bulk bill will fall and gap payments will rise. Cuts to funding for public hospitals will reduce the number of beds available and grow waiting lists, as well as increasing the wait times for emergency treatment. Educational opportunities for struggling families on benefits or with very low incomes topped up by welfare will reduce. And bad economic management and handouts to the rich will increase our economic problems such that pensioners are more likely to be targets for future cuts.

    Amazing how those who focus on their own circumstances can justify the unjustifiable. Maybe stop thinking about your own situation and telling yourself lies that those who aren't coping as well are at fault, and start to consider the plights of those who cope with chronic illness, disability, family crisis, etc. I know folk who pay $585 a month for essential non-PBA medicines. How well would you cope with that cost burden?

    5th May 2016
    6:58pm
    Another example that the current government doesn't give a $hit about the older population. Mal(evolent) and his selfish, toady, egotistical party of self-servers are ONLY interested in their bank accounts and being re-elected. Bloody pathetic!
    MICK
    5th May 2016
    9:27pm
    See this for what it is Eddie. The government is finding a diversion whilst it puts money into the bank accounts of the wealthy and buries the fact that it has no intention of taxing multinationals. We are canon fodder.
    disillusioned
    5th May 2016
    10:04pm
    Note they didn't reduce their OWN super-dooper pensions, entitlements, etc. One rule for them, another for us plebs. This mob has turned me into a Labor voter!
    Willfish
    5th May 2016
    10:53pm
    Any change, or even proposed change, in government policy to cut back the huge perks available mainly to those who are financially well off, and out come the "poor me" stories. Superannuation has been a huge perk for the wealth for years. The original government policies got it wrong - they forgot to plan for the wealthy and the greedy to use this as yet another way to dodge paying their fair share of taxation. Yes, I have a SMSF, yes, I have enjoyed the perks, and yes, I always expected (and quietly hoped) that eventually the government would come to it's senses and rein this perk in. Just like the multi-nationals and their tax dodges. Legal yes, but moral no. About time immoral was also made illegal. And yes, it looks like I will have to pay more tax. But unlike many others, I do appreciate that I live in the luckiest and best country on earth, and I am not going to squeel like a cut pig every time I am expected to pay my fair share of the cost of running this beautiful country.
    Fliss
    5th May 2016
    11:16pm
    Well said Willfish. I do agree with what you have said except that any changes should be more gradual. Whether as you say, "perks" are immoral rather than illegal, the fact is they were the rules & people were planning accordingly. Most Cha gets (if passed) will take place from July 1st next year, but the $500k cap is from 7.30pm last night!
    MICK
    5th May 2016
    11:53pm
    Australians federal MPs are the most highly paid in the world. Our PM earns more than the president of the United States.
    The super rules are still generous but they did change for new MPs (2004). Readers might be surprised that pickings are not as good as they used to be, but the are still a heap of add-ons which bolster both the pay packets and the super payout.
    Worth a read:

    http://www.theaustralian.com.au/opinion/columnists/end-of-entitlement-culture-must-start-with-mps/story-fnbcok0h-1226835322064
    Daveh
    6th May 2016
    1:32pm
    Three things.
    a) I'll bet the proposed changes to limit the amount in super to $1.6M effectively limit the amount you can draw down based an an average life expenancy but I'll the change will not affect pollies pensions
    b) the $500,000 cap backdated 9 years leaves me in limbo land. I want to put some money into super but cannot because of what happened years ago. The changes are not even law yet so I'm stuffed either way if I put money in or just leave it in the bank. The gov't shold be liable for compo for stuffing me around especially if the changes in the budget do not become law. If the change was $540,000 back dated to 1 July 2015 this would be tollerable.
    c) How many people are aware that concessionly taxed super is taxed again when you die and leave he money to dependents. It was called the defacto death tax brought in my Costello years ago.
    Anonymous
    7th May 2016
    6:06am
    I only learned about the ''defacto death tax'' a few months ago. It shocked me.

    Of course the $1.6 mil cap won't apply to politicians. They are not subject to any of the laws they impose on others.

    As for the $500,000 cap, I'm not an expert on super laws but it seems to me that it might be discriminatory against folk who, for whatever reason, have had limited opportunity for concessional contributions. But the LNP has a habit of favouring the more privileged in society.

    And the backdating is wrong. We need a set of rules we can be confident will prevail. Constantly changing the rules is disruptive and will do economic harm.

    8th May 2016
    9:48am
    A lot of angst here against the government, but I think this government, aided by the Greens, has done one very good thing for the yet to retire. Sadly, it kind of screws many of the already retired (including me), but for those fortunate enough not to yet be of retirement age, there is, from Jan 2017, a wonderful new SAFE, strong return investment opportunity available.

    Simply cash out all assets over about $250,000 for single homeowners/$350,000 for couples and buy a good fireproof safe that you can fix securely somewhere in your home, and stash all your cash in it. The government will give you a 7.8% return, indexed to inflation, plus a host of nice benefits, for doing this. Does it get any better in today's risky, low-return environment?

    Not so good for the taxpayer, me thinks (though Bonny seems to endorse the idea of taxing the nation to give handouts to people who spend up big or hide their money), but it's sure a good deal for those who are positioned to take advantage of it.
    Fliss
    8th May 2016
    10:32am
    Haha!! Good advice Rainy! Too late for me too - even though I'm not yet retired. But because I've been planning for it (using the current - until Budget Night) rulings, I've been cashing out assets & putting proceeds into SMSF. So yes, I'm screwed too. LOL!


    Join YOURLifeChoices, it’s free

    • Receive our daily enewsletter
    • Enter competitions
    • Comment on articles