Neither major political party are likely to offer a stable superannuation environment after the federal election, despite the leader of the opposition, Bill Shorten, calling for limited change when he oversaw the sector during the last Labor government.
Wealthdigital technical manager Rob Lavery said due to past preservation rules, superannuation fund members needed to ‘take a leap of faith’ their retirement savings would not be impacted by rules that did not exist when the original contributions were made, and that a raft of changes over the years had undermined this faith.
“These prospective changes continue a long history of legislative changes to superannuation. Examine one single aspect of the super system, such as concessional contributions, and the problem becomes clear,” Lavery noted.
“Since the introduction of the Simpler Super changes under the Coalition in 2007, the concessional contribution cap halved in 2009 under the ALP, the higher cap for members over 50 was removed by the ALP in 2012, a higher cap was reintroduced in 2013 and the age limit for that higher cap was reduced in 2014 by the ALP, and the higher cap was removed by the Coalition again in 2016,” he added.
“[Also] no sooner has the Coalition introduced the concept of catch-up contributions than the ALP is proposing to remove it again,”
Lavery pointed out it was a past Labor government which created a superannuation Charter Group 2013 to establish a “Charter of Superannuation Adequacy and Sustainability”, which warned about the dangers of excessive changes to superannuation.
“The report from the Charter Group was pointedly subtitled “Fewer changes, better outcomes” and the foreword to Treasury consultation was written by Bill Shorten when he was the Minister for Financial Services and Superannuation,” he said.
“In that foreword Mr Shorten stated ‘Current and future Governments must recognise the need to provide superannuation policy certainty’. Unfortunately that sentiment seems to have been forgotten in the five years since it was written.”
Lavery said the superannuation policies being presented at this election are unlikely to contribute to stability within the superannuation sector and were poles apart forcing voters to choose between an expansion in the availability of tax concessions or an increase in superannuation guarantee contributions.
“With superannuation representing two of Australia’s three-pillared approach to funding retirement income needs, the third being the age pension, policy needs to be developed cooperatively rather than divisively. It is the only way to ensure Australians can have confidence that the rules won’t change on them after they have made their contributions.”