NEWS – Do you agree to have the proposed $25,000 cap on concessional contributions? Some agree and some disagree

NEWS – Do you agree to have the proposed $25,000 cap on concessional contributions? Some agree and some disagree

Do you agree to have the proposed $25,000 cap on concessional contributions? Some agree and some disagree

The May budget proposed several changes to the super system – one is that all workers will come under a $25,000 cap on concessional contributions (mainly those are the employer contributions for workers).

A report at SMSF Advisor states –

Challenger’s Jeremy Cooper has defended the proposed $25,000 cap on concessional contributions – a budget measure that has been met with significant opposition in the SMSF sector.

Treasurer Scott Morrison announced plans to lower the concessional contribution caps for superannuation to $25,000 in this year’s federal budget. Key industry bodies, including the SMSF Association, have criticised the measure, saying it will have an “enormous impact” on those who are aiming to be self-sufficient in retirement.

Speaking at the Tax Institute’s Superannuation Conference, Mr Cooper said while some might regard the measure as “draconian”, it will not be a significant roadblock to accumulating retirement savings.

It is only a tax measure, not a savings cap as some commentators assert,” Mr he said.

“It will not prevent most people saving for retirement, either in or out of the super system. It will merely dictate how much of a leg-up certain savers will get from the tax system.”… MORE HERE

At the Financial Observer, findings by the founder of SuperRatings, Jeff Bresnahan reported –

the $25,000 annual concessional contribution limit was “the least thought out” of the super changes in Bresnahan’s opinion, as it limited pre-retirees’ ability to contribute to their super when they most needed to. “The last 15 years of work are for many the only time they are able to fast-track contributions to build up their nest egg and should be encouraged, not restricted,” he said. “This is particularly relevant for those currently aged over 50, most of whom haven’t enjoyed the benefit of full superannuation throughout their working lives and are only now reaching a time in their lives when they can afford to make additional contributions.” MORE HERE

While research by The Grattan Institute, reported at The Conversation, finds –

Parts of the budget package may make the system even more generous to high-income earners – and more expensive for the government.

Under the plan, people will be able contribute more to their super when they have not reached their pre-tax contributions cap in previous years. Taxpayers with a super balance of less than A$500,000 will be able to draw on unused caps from the previous four years to make “catch-up” contributions.

These caps are currently $35,000 a year in pre-tax contributions for a taxpayer over 50, $30,000 for one under 50. The budget will create one cap of $25,000 a year. Being able to make these payments is excellent for one’s tax bill, as they attract only 15% tax for those with incomes of under $250,000, and 30% for higher earners – rates far lower than most people’s marginal tax rate.

The budget papers trumpet the ability to bring forward unused caps as helping women and carers and anyone with a broken work history. But as Grattan’s submission to the recent Senate Inquiry into Economic Security for Women in Retirement demonstrates, all the evidence shows that few middle-income earners – and even fewer women – make large catch-up contributions to their super fund. Women aged below 50 make up only 12% of people that age with balances less than $500,000 who contribute more than $25,000 a year to super. Most women simply can’t afford to make large catch-up contributions. A mere 2% of women with superannuation balances of less than $500,000 – 130,000 people – made pre-tax contributions of $25,000 or more in 2013-14. And 80% of them are among the top 20% of income earners.” MORE HERE        

What are your thoughts?

How will the proposals affect your retirement plan?

Leave a comment!/

Interested to know what self-managed super (SMSF) is all about, and if it is for you?

If you want experts who have years of helping others, without the hype – then call for a FREE strategy session today and see how our Super-Connector Service assist finding the right expert to answer your question – it’s FREE also! No obligation. 0407 361 596, Paul.

Also get your FREE Expert Guide – Self-Managed Super and You – top right hand side above.


About SuperBenefitnews

Self-Managed Superannuation Service Providers in Australia. SuperBenefit provides a wholistic SMSF assistance, education and administration service continuum - 1. “assistance” is help of whatsoever nature where our overall SMSF experience and knowledge enables us to provide assistance/help without any legal (or “license”) limitations. 2. “education” involves providing knowledge through teaching, coaching and mentoring about all matters SMSF, including (but not limited to) investment issues such as equities and property, 3. “administration” encompasses all admin aspects of legally required SMSF trustee and member record keeping including (but not limited to) audit and ATO matters. In keeping with our key point that SuperBenefit does not provide Financial Advice, where issues arise from 1, 2, and/or 3 above Indicate a need for a legally authorized provider (such as a Financial Adviser) and the client does not have their own service provider, the client can utilize SuperBenefit’s ‘Connect Assist’ … SuperBenefit, in itself, does not provide Financial Advice, but it does provide the wherewithal for great SMSF service. WE do not provide Financial Advice or any other service that requires a legally authorized provider. However, where such advice or service is required we have our ‘Connect Assist’, a SuperBenefit resource we use to connect clients to a Licensed Advisor or other legally authorised service provider. Call us 0407 361 596, no obligation FREE Connection call to see how we can help you!
This entry was posted in News & Stats, Pensions / Income Streams, Retirement Planning, Superannuation General and tagged , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s