Don't panic! Change to superannuation here to stay
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Tim Wedd is the executive director of Crystal Wealth Partners, a boutique financial advisory and investment management firm specialising in the delivery of services to high net worth individuals and family offices. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind.
What is clear from last week's Federal Budget (and Labor response) is that no government plans to leave superannuation untouched. The real work now is to look at what this means for current and future retirement plans.
Tim Wedd, executive director of privately-owned Crystal Wealth Partners, said: "While we were anticipating some change to contribution rules in the Budget, the changes proposed for retirement incomes provide another twist in the ongoing adequacy debate."
"Since superannuation started in 1983, we have seen maximum contribution rules, maximum funding rules, compulsory (SG) contributions, maximum benefit limits (RBLs) and a raft of other 'voluntary' savings sticks and carrots."
"Now it appears we look set to work with both contribution and final benefit limits from 1 July 2017. This will make proper analysis and personal advice crucial for clients to successfully navigate the right retirement outcome.
"While the proposals are not law--and may inevitably see further change before final implementation, particularly given the upcoming federal election--it is important for everyone to take a stock take of their current position now."
Just ask yourself the following simple questions:
1) Do you make or plan to make more than $25,000 pre-tax contributions to super each year (including SG amounts)?
2) Do you earn now or will earn over the near 12 months more than $250,000?
3) Will you have an individual member account balance of $1.6 million or more by 1 July 2017?
4) Have you made more than $500,000 of after-tax (non-concessional) contributions to super since 1 July 2007?
5) Do you plan to make additional after-tax (non-concessional) contributions at some stage in the future?
6) Will you have a "transition-to-retirement" pension by 1 July 2017?