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Super popularity set to spiral following budget

news
By sreporter
May 16 2016
1 minute read
2 View Comments

Superannuation is set to be a “much less attractive” future savings vehicle following the federal budget, according to one large SMSF advice network.

The changes to the contribution caps, including a lifetime limit on non-concessional contributions of $500,000 and an annual limit of $25,000 on the concessional cap, will affect a significantly larger proportion of Australians than the government is suggesting, according to Dixon Advisory.

Similarly, the limit of $1.6 million for a pension fund acts as a further deterrent to investment in superannuation.

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“While the government argues this limit will affect only a small number of retirees, the harsh reality is that many existing retirees will be affected by this change," Dixon Advisory said. "The balance of their money will have to be switched to an accumulated account subject to 15 per cent tax on earnings, or withdrawn from the fund.

The Labor party alternative, which is to tax annual earnings on pension funds in excess of $75,000 annually at 15 per cent, could equally be a deterrent.

“Clearly, accumulating large amounts in superannuation will be a much more difficult strategy and, unlike with previous budget changes, there are limited opportunities to protect personal positions before the legislation is enacted,” Dixon Advisory said.

Read more:

Limited licence to take hit following budget

TRIS changes tipped to hit more Aussies than realised 

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Comments (2)

  • avatar
    George Lawrence Tuesday, 17 May 2016
    Am I missing something: isn't the headline contradictory to the story? When used as a verb "spiral" means escalating, increasing.
    0
  • avatar
    Dr Terry Dwyer, Dwyer lawyers Monday, 16 May 2016
    Indeed. Wealth has to be accumulated elsewhere once you reach the $1.6 million. Family trusts are not enough either. One has to look further afield.
    0
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