Draft super regs: Fair & Sustainable, subsidiary objectives for super

The Government has released draft superannuation regulations for consultation, including implementation of some of the ‘Fair and Sustainable’ super changes and to set subsidiary objectives for the super system.

The draft regulations, which were released on Friday the 16th of December, include:

  • Defining total superannuation balances
  • Release authorities
  • Lowering the annual non-concessional cap
  • Improving access to tax deductions for personal contributions
  • Implementing the transfer balance cap

This follows from the passage of the Treasury Law Amendment (Fair and Sustainable Superannuation) Act 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Act 2016 in November.

The proposed regulations would also set the following as the subsidiary objectives of superannuation:

(a) to facilitate consumption smoothing over the course of an individual’s life; and

(b) to manage risks in retirement; and

(c) to be invested in the best interests of superannuation fund members; and

(d) to alleviate fiscal pressures on the Australian Government from the retirement income system; and

(e) to be simple and efficient, and to provide safeguards.

The Government intends to set the primary objective for superannuation in legislation.

Treasury says that: “Further draft regulations to support innovative income stream products and valuation rules for the transfer balance cap will be released for public consultation in early 2017, prior to the commencement of the measures contained in the reform package.”

Submissions in response to the regulations close 10 February 2017.

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3 Replies to “Draft super regs: Fair & Sustainable, subsidiary objectives for super”

  1. Totally agree with changes to define the purpose of superannuation and to limit access to superannuation for the purpose for which they were established – to provide income in retirement and lessen the financial burden on the Government for retirement welfare. Lump sum withdrawals, transition into retirement are two areas that must be tightened up. Currently superannuation laws are too often being used for tax minimisation rather than retirement funding.

    1. Sorry, but I don’t agree. Most reports I have read show that the problem with lumsums you highlight is not that prevalent. The number of lumpsum withdrawals are: relatively small compared to pensions, the ratio of lumpsums to pensions continues to decrease, and lumpsum withdrawals are most prevalent in super accounts with small balances (where the allocated pension would be tiny).

      The government (and opposition) have used the tax minimisation claim to justify these changes but both have presented remarkably little data to back up this claim – I still believe the whole thing is primarily about politics, secondarily about budget repair with only a fleeting glance at “fairness”

      Bob

  2. The government just just managed to invalidate point (e) to be simple and efficient, and to provide safeguards. at least in regards to simple and efficient aspect. Their recent changes to superannuation has massively increased the complexity of the system and significantly increased the cost of compliance. Worse it requires tracking of various caps for every single super account just to increase the taxation on a rather small percentage of the overall number of super accounts – ridiculous policy!

    Bob

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