100-day action plan: a superannuation perspective

In continuing our election coverage, superannuation expert Tricia Kleinig discusses the top five superannuation changes that should be in Scott Morrisons first 100-day action plan.

1. Re-introduce lapsed Superannuation Bills

Since last year, many Bills have lapsed. Contributing factors include; having a minority Government, being stalled in the senate and the disruption of parliamentary sittings due to the election.

Australia now has a majority Government, putting them in good stead to make decisions and pass through legislation swiftly when parliament reconvenes June-end.

Tricia Kleinig says it’s time to re-introduce some of these lapsed Bills, specifically, superannuation measures.

“Re-introducing some of the lapsed bills – such as the increase of permitted members in an SMSF from four to six or, high-income individuals opting out of super guarantee (SG) – should be in Scott Morrisons 100-day action plan,” says Tricia.

“In particular, the change which would see high income individuals opting-out of super guarantee is an excellent measure, as high-income earners wouldn’t breach their concessional contributions cap. Currently high-income individuals who reach their SG limit are being penalised, through no fault of their own,” says Tricia.

Reintroducing lapsed Bills is at the discretion of the Coalition. However, past discussion suggest that this amendment was favoured by the Liberal party.

2. Legislate Budget announcements

While super didn’t take centre stage in this year’s Budget, there were a number of useful measures which you can read about it here.

These included:

  • Allowing older Aussies to continue contributing to super;
  • Changes to the administration of exempt pension income;
  • Changes to SuperStream for super funds and SMSFs;
  • Opt-in insurance within super.

Tricia says that the Coalition should make it a priority for the Government to act on these promises. In particular those which allow older Aussies to continue contributing to their super.

“It was proposed that this particular measure would be implemented from 1 July 2020.

It’s in the best interest of retirees if the Government legislate super contributions for those aged 65 and 66. Giving those in this age bracket more options to contribute to their super makes sense and offers retirees greater flexibility to top up their super accounts without being too restrictive,” says Tricia.

3. Act on the SMSFA recommendation

In a 2019-20 Budget submission, the SMSF association (SMSFA) urged the Government to introduce a spousal rollover measure. Tricia says this is a measure that needs to be considered in the Coalition’s 100-day action plan.

“The recommendation from SMSFA was to allow members with a higher balance, to rollover a portion of their super balances to their spouse, to help even out their balances. This means a spouse above the $1.6 million pension cap could move part of their balance to their spouse who is under the $1.6 million pension cap.

This measure would encourage equitable balances between partners – particularly for women – whose balances are on average 47 percent less then males when retiring.”

4. Encourage more self-funded retirees

With an ageing population and a shrinking workforce, it’s vital that the Government encourages conditions which allow for more self-funded retirees. This involves finding a balance between a plan that supports them, whilst also creating an equitable environment.

Tricia says, having more self-funded retirees would provide relief to the government from having to fund a large number of pensions, whilst also giving retirees more financial freedom.

“To do this it’s crucial to have no reduction in contribution caps,” says Tricia.

“The Australian Government must encourage people to make voluntary concessional contributions via salary sacrifice or member deductible contributions to ensure there are more self-funding retirees.

With so many changes in the SMSF environment discouraging retirees from taking control of what is typically their biggest asset, and restrictions which create uncertainty; the Government must create conditions where people can actively contribute to their futures,” says Tricia.

5. Introduce a higher cap for people over 50

In 2017, the Concessional Contribution limit was reduced to $25,000, regardless of the individual’s age. Tricia says this has impacted the retirement outcomes of many clients who would benefit from a higher cap.

“The Government should look into reintroducing a higher cap for people over 50,” says Tricia.

“People over 50 who may have repaid their mortgage and are no longer paying school fees should have the opportunity to access higher concessional contribution limits at a time when they can now afford it.

In refining this measure, a $1.6 million balance limit to stop people with large balances taking advantage of this could be introduced.

This measure is particularly important for women – or those that may have taken career breaks – to boost their super balances leading into retirement,” says Tricia.

Tricia is a recognised superannuation expert, specialising in superannuation law and tax law as it applies to superannuation. Tricia’s core focus is self-managed super, where she provides compliance and advice to over 250 SMSFs

Want to know more? Read what else our experts are saying in our 100-day action plan coverage.