A view by governments the super system is politically neutral in terms of how it affects voters might mean tinkering with it will continue, according to financial services firm HLB Mann Judd.
Superannuation director Andrew Yee told selfmanagedsuper tinkering with super only affects certain pockets of the voting public, which he said are not “vote shifters”.
“That’s why over time it’s always been tinkered with and they keep on doing it because they see it as it won’t really affect them at the polls,” Yee said.
“It’s not a big enough vote killer to stop tinkering with it.”
He also said the Labor Party’s proposed policies of taxing income in retirement over a $75,000 threshold and imposing a 30 per cent tax on contributions for individuals with incomes in excess of $250,000 under its Fairer Super Plan seem to indicate the party is determined to reduce tax concessions in super.
“Now it’s going to be interesting how they achieve it without upsetting people in their constituency. You might see perhaps a further lowering of the contribution caps. How low can you go?” he said.
He suggested there might be a two-tiered system where if a member has accumulated a certain amount, they can only contribute a certain amount for the rest of their lives.
“Those that are younger might have additional capacity to contribute. That could be something to introduce to make it more equitable,” he said.
He also noted members remain confused about what the super reforms mean for them, with some of his clients thinking they would have to move any funds over $1.6 million out of super.
“They didn’t know they could put it into accumulation. They thought they had to take it out or put it in the industry fund or whatever,” he said.
Others believed if they had to take money out of super, they would be taxed at the top marginal rate.
“But when we said it’s still only taxed at a maximum of 15 per cent it was okay for them,” Yee said.
“That softened all the initial outrage. I think people don’t mind paying a lesser tax instead of having to take money out of super.”
