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Any major policy change in this area lies at some future point, possibly arising from the findings of the Murray Inquiry into the Financial System, see comments here and the Inquiry's webpage for its terms of reference.
The first budget of the Abbott government has been handed down to start the "repair" of the budget imbalance brought about by government spending more than the tax intake since the GFC. Treasurer Hockey has spoken since his 2012 speech in London that "the Age of entitlement is over", that the young need to "learn or earn". The clear implication is that all Australians need to share in the repair job. High income earner's "repair levy" for three years of tax at 49% for amounts over $180K, wages freeze for politicians, 16500 job cuts for public servants, cuts to health and education, the introduction of co-payments for medicare & pharmaceutical costs and generally a more stringent range of tests for eligibility for middle class welfare such as family tax benefits and child care benefits evidence these values of the need to prepare the nation for an ageing population with a greater drain on the public purse.
The Budget announcements for self funded retirees to know include:-
- An individual's superannuation pension will be included in the income test for pension eligibility but not the family home (as was recommended by the Commission of Audit);
- Age pensions will be indexed to CPI rather than wages from 2017 and the upper and lower thresholds for the age pension eligibility will be fixed for 3 years from 2017 (which may lead to a lowering of benefits payable for some);
- The Commonwealth Seniors Health Care Card thresholds will be indexed from 20 September 2014;
- The annual non-concessional contribution cap will go up to $180,000 from 2014-15, up from $150,000. The bring-forward rule will permit a one-off non-concessional contribution of up to $450,000 over three years, or $540,000 over three years from 2014-15;
- Non-concessional super contributions made from 1 July 2013 that exceed the cap may be withdrawn (plus earnings on the excess) without penalty (with tax payable at the individual's marginal tax rate rather than the current 47%, which had been planned to move up to 49%);
- The time frame for increasing the Superannuation Guarantee contribution rate to 12% will be taken out to 2022, compared with the former ALP government's initial timing of 2019;
- Eligibility for the age pension will be increased to 70 from 67, effective 2035 (relevant to those born after 1965).
Overall, these tweaks fall within the language of building a narrative of short-term pain for long-term gain. We think the last word on the topic of entitlement as it relates to superannuation concessions is a long way from having been uttered.
