It has been a year since stricter asset tests for the age pension came into force — overshadowed by a flurry of changes to superannuation that hit mid-year.
But the longer-term financial impact on those affected is now becoming more apparent.
The Self-Managed Superannuation Fund Association threw a spotlight on the issue yesterday.
In a statement, chief executive John Maroney said it was now apparent that the changes to the means test taper rates and thresholds have had “significantly adverse and presumably unintended consequences”.
He said the steeper taper rate that took effect from January 1 last year is now actively discouraging middle-income wage earners from saving to be self-sufficient in retirement.
Maroney argues that the changes have created a “black hole” for people directly affected by the changes that makes them worse off in terms of income — encouraging them to spend up (or cut back on their savings) to reduce their assets to qualify for the pension. He cites the example of a home-owning couple who have a superannuation balance of between $500,000 and $800,000.
Dear Malcolm, Bill, Scott, Mathias, Kelly and Michael,
I/we support Save Our Super's Call For Action.
Save Our Super is an apolitical community-based group which makes the public aware of the implications of the superannuation proposals in Budget 2016 and the Opposition’s superannuation policies. Labor dumped their election superannuation policies and made an increased tax grab on 26 June 2016 despite saying, just over a year ago, "If elected, these are the final and only changes Labor will make to the tax treatment of superannuation". Labor has not announced any replacement superannuation policies.
Some of our supporters vote Liberal/National; some vote Labor; others vote for other parties or independents. But we are united in our call for action by the Federal Parliament.
Save Our Super's Call For Action:
Save Our Super petitions and calls for bi-partisan superannuation policies from Australia’s major political parties:
which will grandfather the following Budget 2016 superannuation proposals:
the introduction of a transfer balance cap of $1.6 million on amounts into the tax-free retirement (pension) phase from 1 July 2017.
after commencement, if individuals already in retirement as at 1 July 2017 retain balances in excess of the $1.6 million cap and do not transfer the excess out of the retirement phase account, an excess transfer balance tax will be payable;
for a person who has not previously been liable to pay excess transfer balance tax—15% of the person’s annualised notional earnings on excess transfer balance for the financial year; or
for a person who has previously been liable to pay excess transfer balance tax—30% of the person’s annualised notional earnings on excess transfer balance for the financial year.
introduction of commensurate measures to defined benefit arrangements;
removal of the tax exemption on earnings which support Transition to Retirement Income (pension) streams.
which will grandfather the Opposition’s superannuation policies:
Labor dumped their election superannuation policies and made an increased tax grab on 26 June 2016 despite saying, just over a year ago, "If elected, these are the final and only changes Labor will make to the tax treatment of superannuation". Labor has not announced any replacement superannuation policies;
and which will protect all Australians against any legislation which changes the rules of the game for existing superannuation savings and actions taken in reliance on those rules and savings, by including appropriate grandfather clauses.