Government announces key super reforms

  Cavendish have also announced the following:
- From 1 January 2015 all new account based super pensions will be assessed as income for income test purposes rather than benefit from a reduction based on the capital component. All existing pensions at that date will be grandfathered.

Unless there is a total misunderstanding, I guess this spells the end of AP's for anyone over 65 with under $500k (or couples with $1M) in a low inflation environment They can invest in a bank account at 5% pay no tax and have it deemed at 4-4.5% or roll into an AP and have the 5% income fully assessed against their pension, getting worse as they get older. Then have the estate pay tax on a death benefit they could have taken out tax free the day before!

I hope I'm missing something here?

  In Greece and Cyprus people riot in the streets when their governments steal their money retrospectively.

Here we have our government stealing money that has taken a lifetime of hard work to accumulate. To mitigate the riots our Labor government only targets their lifetime enemy, those that have worked hard and accumulated money.

If they keep doing this they will render Australia bereft of talent and enterprise.

Roll on September 14!

  These policy makers are so out of touch.

Because none of them have EVER been business owners, they think the only way a person can accumulate wealth is via contributions determinhed by their salary and cash flow position.

What about the poor business owner who ploughs everything over his/her lifetime into a business forgoing much along the way, then, when they have achieved their goals, they sell their business, take advantage of rollover relief etc and now get it up the ejaz for being successful.

It's the type of single minded, anti business, anti entrepreneur policy that we have come to expect form this bunch.

Good luck trying to get this policy up and running when you're in opposition Swan and Shorten!

Actually, these two probably won't feature much in politics at all after September....they'll grab their taxpayer funded lifetime pensions, play with their trainsets in their garages and facetime each other..!

  What does Income mean????

Income received from pension phase is adjusted according to need. My clients who pay $50,000 per annum up to $120,000 per annum for Chemo therapy treatment have to take income at rates highter than 5%. So they WILL BE SOCKED!!!! As though they do not have enough worries as it is.

Alternatively, if BS has in mind taxing the actual returns of funds when the $100,000 limit is exceeded, then clients with small fund balances who earn 20% or 30% or 50% per annum due to my skills will also be socked. Lets see the detail BS.

Also those who are bringing up grand children directly (in the absence of the grandchildren's parenst) have to drawdown more than 5%.

People such as Brogden, Vamos, Cooper, Ripoll, Weaven and BS have never had to deal with real clients in the real world and it is time they got educated to the needs of self funded retirees.

Lets hope this catastrophic proposal never sees the light of day!

The Council of Superannuation Custodians sound like yet another home for Unionists or failed Labor politicians.

  Read http://www.alp.org.au:6020/fed... and see that the Govt is finally going to act on the tax treatment of deferred annuities. This is an improvement, but doesn't address the cost of creation of reserves and conservative investment policies of such products.

The $100k cap can be administered, but its going to be more work and avoidance strategies will quickly emerge in SMSF land. Will it earn more than the mining tax?

The Council of Superannuation Custodians will be doing the policy work that the Treasury should do and the industry will probably have to pay for it.

Finally, ASFA exists to lobby for the benefit of superannuation fund members, but the govt exists for the next 161 days for all Australians and has the right to impose taxes. Once the principles of the tax are decided by the govt, ASFA's role is to ensure the most efficient operation within the govt' s remit. ASFA's lobbying has been impeded by the multitude of industry organisations, AIST,ASFA,SPAA, FSC, ISN all clamouring for the govt's ear. The industry needs to fix this.

  

Johnny my understanding is that the tax is applied to investment income not the actual income they draw from their AP.
Labour have done a generation of damage in two days of prospering. How do you convince people to invest into a structure where the money can't be touched until preservation age BUT the rules can be changed.

  

I have assumed the following, please comment.
1) Super in pension mode.
2) Member assessable income exceeds $100k. Only then tax is payable by super fund.
3) Will hit property sales within SMSF.
4) I cannot see how the super fund paying tax on excess returns will hurt the politicians.

  

It's a pity that most of the comments are based on political allegiances, as is the norm these days, rather than the overall benefit of super to the general community. It was Howard and Costello who vehemently opposed universal super introduced by Keating ("The slow dead hand of socialism" said Howard - now worth $1.4 trillion). It was also Howard and Costello who stopped average superannuations taking out a complying pension to access the pension, while at the same time, introducing the rorts now being targetted by the current government.

  

@ Graham Greenaway:
You won't catch me or anyone reasonable person I know rioting in the streets over this change.
The government is not stealing anything, you've been listening to Abbott too long.
You've still got every dollar you ever had, your just being asked to start paying your fair share to support the Super system.
Completely reasonable IMHO, Super's not supposed to be an endless gravy train for the very wealthy.