Superannuation avoids a bathing

One of the greatest disincentives for people to invest in superannuation these days is the belief that the government will tinker with the rules that affect an individuals ability to control and access their superannuation. The Henry Tax review and the 2010 Federal Budget are now behind us so we can take a look at the bad news for superannuation.........
..........and now let’s look at the good news.
The Good news is that there is no bad news for superannuation. The government have recognised that constant tinkering with superannuation does undermine the confidence in the system and with an aging population this is not good policy.
Certainly, Henry did recommend some changes to superannuation that were ruled out by the government for good reason. This included aligning the preservation age of superannuation (when you can access it) to the Age pension Age (this is going up to 67). Henry also thought a government annuity type product would be a good idea but Rudd & co rightly ruled this to be a private sector matter.
Let’s not forget, the Government already offers an Annuity Type product – it’s called the Age Pension and many people hope to never have to use it but it is a useful safety net for many.
In addition to this it must be noted that the Government has completely ruled out the potential to remove the tax free superannuation payments for those aged over 60. In fact, this was ruled out in the terms of reference for the Henry Tax review.
The changes that have occurred in superannuation are minor, but retain confidence in the system which is invaluable. For those that earn less than $37,000, they will not pay the 15% tax for their super contributions and the Superannuation guarantee levy is increasing from 9% to 12%. Although the increase in the superannuation levy is a blow to employers (particularly small business) who have to pay it - it is being phased in over 10 years and I would think that it will be a factored into future wage negotiations anyway. Other initiatives are also being implemented to assist those over the age of 50 who have low superannuation balances and enable them to contribute more without penalty.
So with only the Cooper Inquiry into Superannuation remaining, the future looks very bright for the retirement savings industry and many can now breathe a sigh of relief.

Julian McLaren is a Representative of the Shadforth Financial Group (AFS Licence No. 318613) Julian may be contacted on 69317488. This is general advice and readers should seek their own professional advice in regards to their individual circumstances