What is clear from this week’s Federal Budget (and Labor response) is that no Government plans to leave superannuation untouched. The real work now is to look at what this means for current and future retirement plans.
Tim Wedd, executive director of privately-owned Crystal Wealth Partners, said: “While we were anticipating some change to contribution rules in the Budget, the changes proposed for retirement incomes provide another twist in the ongoing adequacy debate.”
“Since superannuation started in 1983, we have seen maximum contribution rules, maximum funding rules, compulsory (SG) contributions, maximum benefit limits (RBLs) and a raft of other ‘voluntary’ savings sticks and carrots. Now it appears we look set to work with both contribution and final benefit limits from 1 July 2017. This will make proper analysis and personal advice crucial for clients to successfully navigate the right retirement outcome.”
“While the proposals are not law – and may inevitably see further change before final implementation (particularly given the upcoming Federal Election) – it is important for everyone to take a stock take of their current position now.”, said Mr Wedd.
Just ask yourself the following simple questions:
- Do you make or plan to make more than $25,000 pre-tax contributions to super each year (including SG amounts)?
- Do you earn now or will earn over the near 12 months more than $250,000?
- Will you have an individual member account balance of $1.6M or more by 1 July 2017?
- Have you made more than $500,000 of after-tax (non-concessional) contributions to super since 1 July 2007?
- Do you plan to make additional after-tax (non-concessional) contributions at some stage in the future?
- Will you have a ‘transition to retirement’ pension by 1 July 2017?
If the answer to the above is ‘no’ then you are not impacted by the Budget proposals and planning can continue uninterrupted. In fact, you may benefit from the additional flexibility being introduced with some of the super contributions changes. Otherwise seek help!
Remember, despite constant tinkering any Government still needs super to remain the most tax-effective form of saving for retirement to support an ageing population.
Tim Wedd
Executive Director
Crystal Wealth Partners
p (02) 8667-3046
m 0408 608 349
e tim@crystalwealth.com.au
w www.crystalwealth.com.au