Money

The one superannuation rule that seniors group wish had changed

Dec 01, 2016

As you’ve read here on Starts at 60 during the past week, the government has passed a raft of changes to superannuation rules.

The government claims the changes will save the budget $2.6 billion and affect just 4% of people.

And while seniors groups such as the Council on the Ageing (COTA) have welcomed the changes, some believe the rules could go further.

COTA Australia Chief Executive Ian Yates released a statement last week, congratulating the government on the changes but outlining how the changes could have gone further when it comes to fairness.

“In particular COTA is greatly concerned that the fair and sensible Budget measure to lift restrictions on 65-74-year-olds making voluntary contributions to superannuation without having to be qualified under the work test has been lost along the way” he said.

“This measure would have enabled people who have not fully provisioned for their retirement to still do after they have ceased working.

“It also would have encouraged people to consider utilising some of the equity invested in their primary place of residence for their retirement living; enabling a better standard of living and independence.”

COTA is calling for the government to lift the restrictions.

“We urge the Government to urgently develop an alternative proposal for addressing this key issue for millions of older Australians,” Yates said.

When the changes were first announced in May, Yates told the ABC they brought superannuation back to its original purpose.

“COTA is pleased to see the Government move in a direction that ensures superannuation is used for the purpose it was originally intended — as a way for people to save for their retirement rather than a wealth accumulation scheme for Australia’s highest earners,” he said.

“The changes, many of which COTA has called for over the last few years, will make superannuation much more sustainable and fit for purpose for the long term.”

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.