The time has arrived. I have to admit that the attacks have happened sooner than I expected and action must be taken.
What am I talking about? Anyone involved in SMSFs must man the barricades and let the political class and the fourth estate know that we’re not going to take tax hikes or other nasties.
There seems to be a ground swell against the tax-free nature of super post age 60 and a readjustment of the aged pension income and assets tests. The vast majority of people impacted by the floated changes are middle income earners who have paid tax throughout their working lives.
Recently ASFA – an industry lobby group that mainly represents large super funds – produced information about the estimated 200,000 who have superannuation account balances of more than $1 million.
ASFA argues that “Once a person has accumulated enough superannuation savings to generate an income that will fund a comfortable lifestyle in retirement [which ASFA estimates at December 2014 at $58,000 for a couple per annum] it’s arguable that they no longer need the same tax incentives in place to incentivise them to accumulate further savings and to support the achievement of adequate retirement savings.”
It argues that account balances in excess of $2.5 million that are in pension phase, “should be the starting point for discussions around ensuring the future equity and sustainability of the system.”
In other words the return of Reasonable Benefit Limits that Costello’s Better Super changes removed!
What is ASFA’s data source? Primarily the ATO’s SMSF data because equivalent data for APRA regulated funds isn’t easily obtainable. I’m sure ASFA wouldn’t want to be accused of targeting SMSFs.
The action plan
So what’s to be done?
At its simplest you only need to spend 30 minutes.
Here’s what I encourage you to do – write short simple messages or emails to the following:
1. Prime Minister
2. Opposition Leader
4. Shadow Treasurer – firstname.lastname@example.org
5. Assistant Treasurer
6. Your local Federal Member – simply search for them on the internet
Keep your note short and simple. Here are some ideas that you need to put into your own words:
- You run a SMSF – there are over 1 million members of SMSFs throughout Australia most of them are adults [yes they’ll read between the lines that you mean voters]
- If you’re still working – you’re working hard to save for your retirement in the government’s appointed savings vehicle (superannuation) so you have as little impact on the government’s finances when you retire. To do this you’re foregoing spending money now. You have paid considerable tax all your working life and will do so until you retire. Once you retire your pension will be spent directly in the productive economy
- If you pay the higher income earners super contribution tax – mention that your super contributions face an additional 15% tax which the media never talks about but this must be factored in any decision the government makes
- If you’re retired – you worked hard and saved to be as independent of the government as possible. You paid taxes all your working life. Pension income paid from your super fund goes directly to the productive economy
- Most important point – you’re a voter and any adverse changes made to SMSFs, super in general and unfair adjustments to the age pension income and assets tests will help determine how you vote.
Please don’t expect anyone else to do this work for you. There are enough SMSFs in Australia to change the outcome of an election. We need to use our collective power to get a fair outcome.
The forces against those who have saved and worked hard are powerful. We need to act together!
Some strategies to improve your position
Finally all these policy ideas about penalising account balances above a certain limit tells me that you need to be working on splitting your super with your spouse (if you have one).
I think taking action now would be a sensible idea and I’ll present some ideas to achieve this objective next week.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.