Proposed reforms to Australia’s superannuation system seem to have some people in a bit of a panic this week. The government claims to be improving and protecting our superannuation system by “removing unnecessary costs and better safeguarding the retirement savings of all Australians”.
In contrast to the message the media is portraying, we see the changes as being relatively minor and think that everybody should assess their positions rationally.
Here are a few “calming” thoughts from Rod Dickinson:
- Depending upon the outcome of the election these proposals may not even become law.
- The proposal about taxing income over $100,000 only relates to accounts in “pension” phase only. Not pre-retirement accumulation earnings!
- Trying to even up super balances may become a increasingly important strategy for clients where one spouse has a lot of super and the other has a small balance, if circumstances allow.
- It is more important than ever that all of us (but especially high income earners) are aware of the level of our concessional contributions to super.
- Funds with large unrealised gains in assets such as a property have some scope to manage the potential extra tax in pension phase.
- Whilst more details are required from the government, there may be some strategies that we could look to adopt to reduce the impost of the pension tax. This tax will only be applicable to members with large fund balances (generally over $2m).
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