Industry divided over changes to superannuation
Much has been made of the changes to super announced in the 2016 Federal Budget, and now that Malcolm Turnbull has won the election it looks like they’ll be rolled out.
But there’s one policy in particular that has the industry talking, namely the government’s decision to impose a $500,000 ceiling on after-tax super contributions. In light of this, it’s worth looking at what the key players in the retirement industry have to say.
The Australian Institute of Superannuation Trustees said while it supported the idea of a ceiling, there were concerned about how super funds could implement the policy.
A spokesperson told The Australian Financial Review, “AIST is supportive of the intention behind the $500,000 cap but [we] do have concerns particularly around timelines and cost of implementation for funds. It's easier to monitor the status of contributions made over the course of a year to a member's fund, than over a lifetime.”
The Financial Services Council also raised concerns, with chief executive Sally Loane telling the AFR, “Any measure that is backdated by almost a decade will have issues with implementation and with information retrieval, especially as superannuation is currently transitioning from a paper-based system to a digital system.”
Industry Super Australia deputy chief Robbie Campo added, “If the objective is to ensure the super settings deliver better sustainability, you do need a mechanism so that people don't take advantage of a transition time to boost non-concessional contributions.”
However it seems that with this policy the government will stick to its guns with Finance Minister defending the changes in an interview on Sky News, "These tax concessions were never designed to help facilitate tax-effective wealth accumulation or intergenerational wealth transfer.
"What's been happening is more and more income generated in Australia was entirely outside the income tax system attracting zero per cent income tax - that is just not structurally sustainable and will need to be addressed."
What’s your take on the changes to super, in particular the $500,000 limit to after-tax concessions? Do you think it’s the right move?
Share your thoughts in the comments.
Related links:
What’s next for super under a Turnbull government?
Government benefits to take advantage of in retirement