Are the super changes fair?
Wealthy Retirees
The Federal Budget introduced the biggest range of changes to superannuation since the penultimate Costello Budget a decade ago which gave generous indefinite tax-free super to all people once they attain age 60.
The 2016 Budget has made several proposed changes which collectively have made the system far more equitable – but has it made the system fairer?
The baby-boomers are using the lengthy election campaign to bleat, but most are largely immune from the changes. Even those who are impacted are still well off. Consider a hypothetical retired couple aged 65 with $6 million in superannuation and $1 million in private investments. As long as the assets are split equally between the partners, they can earn $420,000 and pay less tax ($18,646) than someone earning $80,000 – who would pay $500 more tax!
Further, this couple can now make additional concessional contributions until they are aged 74. Even though they are no longer working, they can make contributions out of their investment income. Given the amount of money they have in super, they have probably already used up their non-concessional cap or they could continue adding to that too. Overall, this couple is still very well off from superannuation.
While our example is an extreme case, most baby-boomers have done well out of generous tax concessions and three decades of real investment returns especially the doubling of real house prices. All but the wealthy are relatively unaffected by the Budget changes to superannuation.
