May’s Federal Budget brought in a package of proposed changes to super—the biggest in a number of years. A federal election has also been and gone so what happens now? We spoke to our Industry & Public Policy Manager Benedict Davies to get his thoughts.
So Benedict, May was a pretty busy month in terms of super. What's happened since then?
Since the changes were announced, we’ve been pretty busy having on-going discussions with policy makers.
One of the challenges we face is that we’re not like most other super funds; we offer a more complex product. This means our members are likely to be affected differently by a particular policy than the general public. So rather than rely exclusively on an industry body to advocate for our members, we need to highlight our own issues directly in responses to inquiries and consultations.
In September and October, the Government released three tranches of draft legislation for industry consultation. We've responded to each of those drafts highlighting our particular concerns—mostly to the proposed commensurate treatment of defined benefit schemes under the transfer balance cap.
Since May's Budget, the Government announced further revisions to its proposed package of reforms which included a change to the proposed lifetime non-concessional contributions cap.
In place of the proposed $500,000 lifetime non-concessional cap, the annual non-concessional (after-tax) contributions cap is likely to be lowered from $180,000 to $100,000.
Were you surprised by these changes to their original proposals?
As economist John Maynard Keynes one said, "when the facts change, I change my mind".
And the fact of the matter is the proposed lifetime non-concessional contributions cap did raise some concerns. Many commentators described it as retrospective measure, which led to debates about the meaning of retrospective taxation.
I understand that the possibility of retrospective changes can create uncertainty as people want confidence in their financial futures—it's also not ideal in tax policy formulation—so I wasn't completely surprised to see that particular Budget measured had changed.
So what do you think are the next steps from here?
There's likely to be one more tranche of draft legislation and then we'd expect to see these Bills introduced into the Parliament by the end of this year. There are only a few weeks of sitting days left in the Spring Parliament, so I don't think it's likely that any Budget bills will be passed until 2017.
We've already started planning for these changes and we'll continue to monitor developments as they occur. We'll also continue to keep members informed through our website, seminars and webcasts as well as emails and news updates.
Is there anything else you think our members should be aware of?
I think it’s likely that if these measures are legislated, then there are unlikely to be any more changes to how super is taxed during life of this parliament and—fingers crossed—we may see a period of stability.
While it may mean less excitement on 2017 Budget night for me, it’ll likely mean members can have more certainty planning for their retirement.