Not so super reforms

The government’s proposed superannuation reforms have made quite an impact and not all for the right reasons. The common reaction among industry participants is that these proposals are too complex and may have been designed without proper consultation.

The major proposals include but are not limited to an introduction of a 15% income tax on superannuation pensions if they earn over $100,000, an increase (albeit a minor one) to the amount we can add to our super funds by way of a concessional contribution and a proposal to deem pension income in the same way as money held outside of super.

The major reasons provided for these changes are promote fairness and remove any inequalities currently in the system and target the ‘rich’. The government has, in suggesting only 16,000 Australians will be affected, used a rate of return of only 5% per annum and a balance of $2.0 million. Given that returns for the current year for an average super fund are between 11% and 13% this is way off the mark and in reality many more Australians with much lower balances will be affected.

Apart from adding unnecessary complexity to an already complicated system these reforms, if passed, are likely to result in considerable administration and reporting costs for your fund as well as a reduced confidence in a system that ‘should’ encourage us to save for our retirement with some degree of comfort and certainty. Every time we tinker with the super system our confidence in it is further weakened.

These proposed changes will make our super system unbelievably more complicated. This is a rare gift to the financial planning industry and your accountant but unfortunately not for you.


Knight Financial Advisors Pty Ltd is a Corporate Authorised Representative of Sentry Wealth Management Pty Ltd (AFSL 227 748) ABN 77 103 642 888. The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.

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