What the 2016 budget means for your retirement
<p><em>Geoff Brooks, Executive Officer, Strategic Marketing and Communications for superannuation fund <a href="http://www.equipsuper.com.au/" target="_blank"><strong><span style="text-decoration: underline;">Equip</span></strong></a>, comments on the 2016 Federal Budget, and how it may affect your retirement. </em></p>
<p>The 2016 Federal Budget is just around the corner, and the shift forward to May 3 2016 has caused many to suggest it paves the way for a possible double dissolution election in early July.</p>
<p>This is potentially a double jeopardy situation for those approaching (or already into retirement), as the government has floated a number of potential changes to the rules around super, particularly in relation to the concessional tax treatment super receives.</p>
<p>The first jeopardy is that any changes to super may be effective from budget night. The second is that the government may propose policy changes affecting future budgets and seek a mandate for those changes at this year’s federal election.</p>
<p><strong>But what does all this mean for the average retiree?</strong></p>
<p>First, some reassurance. The political conversation assumes current and future governments will rely on a successful superannuation system to reduce reliance on the government age pension as much as possible.</p>
<p>The Treasurer, Scott Morrison, has repeatedly said that the ideal outcome for any Australian is to be self-funded in retirement. Of course, that is an ideal outcome for the government coffers also.</p>
<p>He has also reiterated that the government is determined that the superannuation system is not used as a tax minimisation or estate planning scheme for wealthy Australians. Even the superannuation industry argues that the system could be fairer, with the balance of benefits shifting in the direction of the less well heeled.</p>
<p>On this point, the government and opposition are basically on the same page, although they differ on the manner by which they can deliver greater equity.</p>
<p>For those relying on their super for some or all of their retirement income, there are several scenarios being discussed to reform the way super is taxed. Some of these reforms relate to the way contributions are taxed, with the government looking favourably at a sliding scale applied to a contributions tax based on a formula - something like your marginal tax rate minus 15%.</p>
<p>For people on lower incomes, this could mean paying virtually no contributions tax, while those at the top end would end up paying something in excess of 30%. Sounds fair? Maybe, but it’s only one option being looked at.</p>
<p>For those with account based pensions, publicly stated proposals focus mainly on taxation of investment earnings for those with very high pension account balances. Currently, investment returns in pensions are tax-free. For most Australians, this would have no effect on their super pension, as their earnings would not be sufficient to pass the threshold.</p>
<p>The other possibility is taxation of retirement income drawn from super. This is extremely unlikely and, if it were to be implemented, it would most likely be phased in over an extended period of time.</p>
<p>What is more possible is some tinkering with the income and assets test applied to the government age pension. Eligibility for the pension will already tighten up from 1 January 2017, as new rules and limits apply to the assets test.</p>
<p>While this sort of measure does not directly affect income from super, it could substantially impact those who derive at least some retirement income from full or partial age pension payments.</p>
<p>Naturally, as a super fund, informing and advising people about how to make the most of their retirement benefits within tax and super rules is a core part of our responsibility to members.</p>
<p>This year we’re extending an invitation through our friends in the Over 60 community to attend a special post-Budget seminar in Sydney on 17 May. </p>
<p>While we’ll be talking about the 2016 Budget, the ‘Start Me Up’ seminar will cover all aspects of retirement, financial and non-financial.</p>
<p>To reserve your seat, please <a href="http://www.equipsuper.com.au/startmeup" target="_blank"><span style="text-decoration: underline;"><strong>click here</strong></span></a> (friends and family welcome): </p>
<p><em>Written by Geoff Brooks, Executive Officer, Strategic Marketing and Communications for Equip.</em></p>
<p><em><strong><a href="http://www.equipsuper.com.au/" target="_blank"><span style="text-decoration: underline;">Equip</span></a></strong> manages $7 billion of investments for members working across a wide range of Australian industry sectors. This <strong><a href="http://www.equipsuper.com.au/" target="_blank"><span style="text-decoration: underline;">superannuation fund</span></a></strong> has been providing strong investment performance and has been a reliable provider of retirement benefits for over 80 years.</em></p>
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