Representatives of seniors and the community sector have written to the Prime Minister, urging him to “hold firm” on changes to superannuation announced in the 2016 Budget.
“On behalf of Australia’s peak seniors’ and community sector organisations we write to urge you to hold firm in resisting calls to weaken, defer or abandon the key features…of the superannuation reform package contained in your recent Federal Budget,” says the joint letter to the PM from COTA and ACOSS.
“Both your Budget proposals, and Labor’s previously announced reforms, take modest steps to address serious weaknesses in the superannuation system which are widely acknowledged. It should be possible in the interests of equitable retirement incomes and budget repair for everyone to at least agree on the key features described below as modest steps on the path to reform.”
The letter says that COTA and ACOSS have been “very concerned” that the tax treatment of superannuation prior to the 2016 Budget was not ‘fit for purpose’. Instead it has become a “wealth and estate management tool,” particularly for high income earners, while offering little support for people on low incomes.
“The Budget measures to limit the amount of accumulated superannuation on which earnings will be tax free; to place a lifetime limit on the level of non-concessional contributions; and to lower the annual limit on concessional contributions; all go a significant way to addressing those concerns. Some would argue the changes should have gone further in that direction.”
The organisations argue that the changes announced in the Budget are not retrospective.
“While we recognise that concerns will be raised by people with very substantial assets or income about tax changes that impact on the treatment of savings they have already accumulated, a change to the taxation of future super fund earnings is not ‘retrospective’ as we and other superannuation experts have argued elsewhere.”
“If all changes that directly or indirectly affect the tax treatment of existing superannuation assets were ‘grand-parented’ this would greatly increase the complexity of superannuation along with the costs of administration, and give rise to serious equity concerns.”
When recently asked if the superannuation policies announced in the Budget might change after the election, or if they were ‘ironclad’ the PM answered: “It is absolutely ironclad. Yes the commitment that we have made in the budget are our policy. If we are returned we’ll implement those policies. I believe they are fair. They make the super system, more flexible and more sustainable.”
COTA and ACOSS have also written to the leaders of the ALP and Greens, urging them to extend their superannuation policies to address the same issues.