How the superannuation changes could affect your retirement

No doubt you’ve heard about the changes to the superannuation passed by the Federal Government last week? Well, if you’re

No doubt you’ve heard about the changes to the superannuation passed by the Federal Government last week?

Well, if you’re not sure what they are – here’s a quick recap.

The new rules, which will come in effect on July 1 next year, impose a $1.6 million cap on your tax-free super pension.

It also includes a 15% earnings tax on transition to retirement pensions and the income threshold for the 30% contributions tax has been lowered from $300,000 to $250,000

The annual limit on after-tax contributions has also been lowered to $100,000, down from $180,000, while the annual cap on concessional contributions to $25,000 down from $35,000 for over-50s.

The new system will see the number of Australians paying the 30% contributions tax jump from 165,000 to 305,000.

Read more: Government passes superannuation changes to save nearly $3 billion

So, you might be wondering what all this means for you?

Well, an article in the Australian Financial Review points to the super changes as having a possible impact on your retirement.

The article argues that the changes could see Australians over the age of 50 work for an extra 18 months to enjoy the same living standard as the present day system.

Pointing to analysis by global consulting firm Mercer, the AFR writes that at the moment a 50-year-old earning $150,000 per year can retire at the age of 67 with a super/retirement income of “just below 70% of their net salary”.

But under the changes, they would only be able to put $25,000 a year into their super – giving them just 61% of their net salary in annual retirement income.

Senior actuary at Mercer David Knox told the AFR the changes would mean your super would be providing you with 10% less than the current system.

Mercer’s analysis shows that you’d need to work an extra 18 months if you didn’t want a lowered retirement income. 

The AFR also quotes financial advisers, who warn the changes will make superannuation system more complicated.

Claire Mackay from Quantum Financial told the publication the new rules “are substantially different.”

“Super is complicated. Now it is even more complicated,” she said.

What do you think? Do you think the super changes will have an impact on you?



  1. Linda Bruce  

    I think its about time they stopped tinkering with super and moving the goal posts!! wasnt super created so that instead of relying on state pension, we can rely on our savings instead?!
    So why are they making it harder for people to save and if rich, why punish them for being smart and rich? at least they arent living off the pension!!

  2. Ronin  

    It certainly affects me. Like many I had some unexpected reversals of fortune, which meant I had little in my superannuation account. Now 66 and working full time, I was now in the fortunate position where I could salary sacrifice to put $35,000 per year into Super, which hopefully would enable me to retire at some time in the future and, with a Government pension and my super savings, I could afford to live a reasonable, if not comfortable, retirement.

    Reducing this to $25,000 ($21,250 net after 15% tax) means I will have to work that much longer before I can retire. So, I keep working, nobody gets to move into my role, and with a cascading effect, no new hire gets a job! Brilliant idea politician f*ckwits, who have ensured they have a gold-plated pension plan!

  3. Guy Flavell  

    OOH BOO HOO … poor little luvvies !! The nasty old Government has changed their superannuation.

    Final salary $150,000 x 61% = $91,500 pa.
    Final salary $100,000 x 61% = $61,000 pa.
    Final salary $ 80,000 x 61% = $48,800 pa.

    Try existing on a $22,750 pa old age pension you bleating lot of whingers !!!
    I just wish the Government had reduced the cap to $1.2 million and NOT given you people
    such generous taxation perks.

    Seriously though, I honestly admire all self-funded retirees who have diligently planned and
    saved for their retirements. You should be very proud NOT to be on the welfare system in retirement. But, the above figures also indicate you can all still live a VERY comfortable lifestyle
    in your golden years without any whinging.

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