A super update

Defining the purpose of superannuation

In October 2015 the Government announced that it would develop legislation to enshrine the objective of superannuation, as part of its response to the Financial System Inquiry (FSI).

The Government released a discussion paper in March 2016, setting out its proposal to accept the FSI’s recommendation that the primary objective of the system is to ‘provide income in retirement to substitute or supplement the Age Pension’.

If legislated, the Government’s proposed objective is expected to be effective from 1 July 2017. 

Productivity Commission review of superannuation competitiveness and efficiency

In February 2016 the Government tasked the Productivity Commission with developing and releasing criteria to assess the efficiency and competitiveness of the superannuation system. The task also included a review of the choice and default markets to consider alternative models for allocating default fund members to products. This work will inform a Productivity Commission review of the efficiency and competiveness of the system following the full implementation of the MySuper reforms in 2017.

Federal Budget

The 2016 Federal Budget included some significant changes to the superannuation system. Some of the key proposals included lowering the concessional and non-concessional contribution caps, lowering the income threshold at which the additional 15% contributions tax applies and introducing a $1.6 million cap on the amount of superannuation a person can transfer into the retirement phase.

Most of the changes proposed in the Federal Budget will come into effect on 1 July 2017.

Age Pension assets test

From 1 January 2017 the thresholds for the Centrelink assets test, which determines eligibility for the Age Pension, are changing. This could mean a significant reduction in the Age Pension for some members.

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