Changes to superannuation laws can end up with many winners and losers.
For instance, someone who had worked for half of their working lives without compulsory super may consider themselves unfortunate next to younger people who will benefit from the Superannuation Guarantee system for all of their working lives.
And take a person over 50 who was in the fortunate position of being able to make maximum concessional superannuation contributions in recent years before the Government’s next halving of the standard contributions cap* from 2012-13.
Yet many other fund members – including those who happen to turn 50 after June 30 this year – may not have the opportunity to make such large concessional contributions – even if they can afford it.
And hundreds of thousands of baby boomers will gain little or no benefit from the measure to progressively increase compulsory contributions from 9 to 12 per cent by July 2019, which was passed by Federal Parliament this week.
Older fund members, in particular, may remember the tax surcharge that the Howard Government once applied to the deductible contributions for middle and higher-income fund members. The surcharge had an impact on the retirement savings of those who happened to be liable for the few years before the impost was dropped from July 2005.
Informed fund members typically would try to understand the effect that any significant change to superannuation laws may have on their savings – and then they would consider whether to adjust their strategies in response.
For example, many fund members who will be affected by the imminent halving of the standard concessional contributions cap will no doubt be considering increasing their non-concessional contributions.
*The Government has proposed keeping the current concessional contributions cap of $50,000 for those over 50 with less than $500,000 in super.