{"id":8712,"date":"2018-07-17T14:59:58","date_gmt":"2018-07-17T04:59:58","guid":{"rendered":"http:\/\/www.dbalawyers.com.au\/?p=8712"},"modified":"2018-07-31T16:37:39","modified_gmt":"2018-07-31T06:37:39","slug":"stocktake-on-recent-superannuation-changes-when-will-the-government-give-us-a-long-term-vision","status":"publish","type":"post","link":"https:\/\/www.dbalawyers.com.au\/announcements\/stocktake-on-recent-superannuation-changes-when-will-the-government-give-us-a-long-term-vision\/","title":{"rendered":"Stocktake on recent superannuation changes – when will the Government give us a long-term vision?"},"content":{"rendered":"

\"\"Daniel Butler<\/strong>, Director (dbutler@dbalawyers.com.au<\/a>)<\/em><\/p>\n

We have recently experienced substantial superannuation changes during the period of 1 July 2017 to 30 June 2018. I therefore provide a brief \u2018stocktake\u2019 of the changes introduced by the current Coalition Government. A number of these policies were adverse to many members.<\/p>\n

Prime Minister Malcolm Turnbull has said that the next Federal election is to be held in 2019. As Labor may be elected, I have also provided a brief \u2018stocktake\u2019 of the key Labor Government proposals that will impact superannuation.<\/p>\n

Despite the superannuation system being a long-term savings system, the Coalition Government has introduced ongoing unpredictability and costly changes.<\/p>\n

Indeed, many members\u2019 super savings are stuck in the system (\u2018preserved\u2019) for the long-term; typically until a member attains 60 years and retires. Members make their contributions and retain their investments in the super system on the basis that the rules which applied when they put their money in will be the rules which apply when the time comes to take their money out. Any proposed adverse changes should therefore be accompanied by appropriate \u2018grandfathering\u2019 provisions.<\/p>\n

Members are at the mercy of government policy. Proposals that may not have even been notified to the electorate, such as the numerous adverse measures introduced by the Coalition Government\u2019s surprise announcement in the May 2016 Federal Budget, followed repeated promises by the current Coalition Government that there would be no adverse change without prior consultation.<\/p>\n

Not surprisingly, many members have lost confidence in the super system due to the growing uncertainty and significantly reduced tax concessions that previously applied. Superannuation requires certainty and rules which remain stable. The rules should encourage long-term savings rather than being a mechanism for governments to treat as a means to extract further tax revenue to balance their annual expenditure needs.<\/p>\n

COALITION GOVERNMENT RECENT ADVERSE CHANGES<\/h3>\n

Before I discuss the current government\u2019s adverse changes, I would like to highlight one of the biggest mistakes relating to a proposed change that I have ever witnessed in my lifetime.<\/p>\n

In its 3 May 2016 Federal Budget, the Coalition Government introduced, by press release, a lifetime non-concessional contributions (\u2018NCC\u2019) cap of $500,000. That lifetime cap was designed to take into account all NCCs made on or after 1 July 2007. However, contributions made before the Budget announcement were \u2018grandfathered\u2019 and would not have resulted in any excess NCCs.<\/p>\n

That announcement was to have retrospective application for a period of almost 9 years (ie, 1 July 2007 to 3 May 2016 is around 3,230 days or just over 8.8 years). Thus, many people who had previously relied on the law during that period to make super contributions were not to be permitted to make any further NCCs, since they would have exceeded their $500,000 lifetime cap. Despite that practical retrospective impact, the Coalition Government insisted that the proposed change was not retrospective. The Coalition Government took the view that the $500,000 lifetime cap was prospective only; as it only affected NCCs made after the 3 May 2016 Budget announcement. Whilst the Government argued that position, many disagreed. It followed repeated promises by the Coalition Government that the superannuation rules would not be changed adversely without prior consultation.<\/p>\n

The controversial lifetime cap demonstrated how not to introduce superannuation reform. Indeed, this change attracted adverse feedback from many sectors of the superannuation industry including the Coalition Government\u2019s own backbenchers. The Coalition Government eventually realised that the proposed $500,000 lifetime NCC limit was too contentious. On 15 September 2016 the Coalition Government dumped this change and replaced it by a $1.6 million total superannuation balance limit that precluded further NCCs from 1 July 2017 where a member exceeded a $1.6 million superannuation balance. Clearly, the $500,000 lifetime NCC limit policy process was flawed for, among other things:<\/p>\n