Another month has rolled by and we are little clearer on what may happen in the immediate future to the superannuation landscape.
Looking from a glass half-full perspective, there seems to be some hope the unpalatable retrospective nature of the changes may be eliminated.
But this ray of light did not emanate from the coalition government, which hasn’t given an inch on amending any of the original proposals and seems intent to push on with the unpopular initiatives.
Revenue and Financial Services Minister Kelly O’Dwyer has announced the consultation process with sectors of the super industry will commence shortly. But indications are that this will only cover off implementation issues and not the nature of the proposals themselves.
Instead, the glimmer of hope has come from Labor, with opposition treasury spokesman Chris Bowen declaring the party is not only deeply concerned over but also opposed to the retrospectivity of the changes.
With any luck this will mean spirited debate will take place in both houses of parliament to ensure the changes will be effective from a present or future date and will exclude any measures stretching back a decade or more.
And speaking of commencement dates, several of the proposed changes had a stipulated starting date of 1 July 2017.
While on the face of it this appears to be sufficient notice to prepare to implement any system amendments, in reality this is not the case. Again, this is largely the government’s doing.
The first sitting of the new parliament will not be until 30 August, allowing only three months for the legislation to pass through both houses before the end of 2016.
It is difficult to see this happening, given the consultation process has to be completed and then the bills tabled, and it is likely resistance and subsequent negotiation will be necessary before we can entertain the idea the legislation will be passed.
Industry sources have indicated the government may seek to legislate the changes in stages, with less contentious proposals to be passed first. These may comprise such adjustments as the transition-to-retirement strategies and perhaps the $1.6 million transfer balance cap, which is likely to receive bipartisan support.
However, the $500,000 lifetime non-concessional cap is without doubt the most contentious proposal and likely to have the greatest impact on superannuants. As such this is set to be the change that takes the longest to resolve in parliament.
It’s therefore improbable this proposal will be legislated in 2016, meaning at best it will pass through parliament in February or March 2017.
As the implementation date is signalled for 1 July 2017, this may mean adjustments to super administration systems will have to be carried out and completed in the space of three months.
The mind boggles as to how chaotic the process may become across the entire retirement savings landscape. And if it turns out to be extremely costly, you know who’ll end up paying for it.
Perhaps an extension of the 1 July 2017 deadline is a good idea, but the element of common sense appears to have vanished since the budget.
