Category: Save Our Super Articles

Save Our Super

Save Our Super is an apolitical community-based group which makes the public aware of the implications of the Coalition’s superannuation legislation and Labor’s 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.

Grandfathering Justified In Proposed Legislation

The historic use of grandfathering to protect those who were significantly affected by major superannuation rule changes, justifies its use in the proposed legislation.

Unfair and unreasonable

It is manifestly unfair and unreasonable to individuals who now, or will, rely on their superannuation savings for a retirement income under the then existing rules to make new rules which significantly affects them.

Therefore, appropriate grandfathering provisions need to be put in place to protect all significantly affected Australians.

Undermines trust

A Government’s right to govern is based upon the bond of trust between the people and their Government. Trust is the currency of Government. When, by a breach of trust, a Government debases that currency, the people lose confidence in their Government.

And so it is when Governments make major rule changes to an existing superannuation system. If they do not provide appropriate grandfathering provisions, Australians will lose faith in the superannuation system.

Those who will lose faith include the millions of Australians who are effectively compelled by the Australian Compulsory Superannuation Scheme to place their trust in the Government.

Furthermore, those who are yet to enter the superannuation system need to be assured, before they commit their savings to the superannuation system, that they can trust Governments to always treat them fairly and reasonably.

Superannuation – A Long Term Savings Plan Under Threat

Australians’ investment in superannuation is an almost life-long savings plan. It starts from the first superannuation contribution and lasts until the final pension payment.

In 1991, the Superannuation Guarantee levy was imposed. Australian’s participation in superannuation has accelerated from about 30% of employed persons to over 90% today.

Since the 1980s, Australia’s accumulated superannuation savings have risen from an amount equivalent to about 30% of GDP to about 120% of GDP today.

Over time, if more Australians contribute more super funds for longer proportions of their working lives at higher rates, average superannuation balances at retirement should continue to rise.

However, that growth is threatened by the Coalition’s superannuation legislation and because appropriate grandfathering provisions are not included in that legislation.

Opposition’s superannuation policies which should be grandfathered

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.

Budget 2016 superannuation proposals which should be grandfathered

As from 15 September 2016, the current Budget 2016 superannuation proposals include:

  • 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, a similar tax treatment that applies to excess non-concessional contributions will be applied to that excess at the top marginal rate of tax (ie 49% for the 2014 to 2016 income years);
  • introduction of commensurate measures to defined benefit arrangements;
  • removal of the tax exemption on earnings which support Transition to Retirement Income (pension) streams.

On 15 September 2016 the Government abandoned the following proposal:

  • establishment from 3 May 2016 of a life-time non-concessional contributions cap of $500,000 on all non-concessional contributions made since 1 July 2007.

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