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$1.6m super cap 'must be implemented'

$1.6m super cap 'must be implemented'

Tim Stewart
— 1 minute read

The government must go ahead and limit pension-phase assets to $1.6 million, argues SuperRatings, but the research house is less convinced about other proposed changes to superannuation.

Of the proposed changes to super, the $1.6 million pension-phase cap is the "least controversial" and should definitely be implemented, said SuperRatings chairman Jeff Bresnahan.

"Any politician who votes against implementing a $1.6 million superannuation cap would surely be committing political suicide.

"Even worse would be a Coalition member who would consider crossing the floor on this part of the legislation," he added.

If the change were to be implemented, an Australian couple with $3 million in super and $2 million in cash would "not be liable to pay one cent in tax", Mr Bresnahan said.

"If a retired couple can generate over $225,000 in tax-free earnings per annum from their existing capital in the current low rate environment, and our elected representatives would consider giving them more, then we have completely lost the plot!" 

Similarly, an individual with $1.6 million in super and $1.1 million in cash would not have to pay any cash.

"When one considers that even savings in excess of these amounts will still only then be concessionally taxed, that’s one hell of a standard of living!" Mr Bresnahan said.

However, more thought is needed when it comes to the "retrospective" lifetime $500,000 cap to be placed on non-concessional contributions, he said, adding that instead of calculating the cap from 1 July 2007, the start date should be the night of the 2016 budget.

As for the lowering of the concessional contribution limit to $25,000, Mr Bresnahan labelled it as "ludicrous".

"Those 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 [they] should be encouraged, not restricted," he said.

"If the government is going to set a limit, then at least enable everyone to get close to it – not just those starting out."

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$1.6m super cap 'must be implemented'
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