The 2016-2017 Federal Budget has introduced mammoth changes in the superannuation sector, which could help make the economy fairer during ‘financially constrained times’, according to the Actuaries Institute (AI).
Approximately 96 per cent of individuals with superannuation will not be adversely affected by changes, which, President Lindsay Smartt, said will revitalise the system.
“Overall the Budget changes improve the system, making it fairer while also increasing revenue to assist the economy,” he said.
“The Institute believes these changes will help meet the government’s objective of superannuation — to provide income in retirement to substitute or supplement the Age Pension.”
Tax exemptions to retirement products and the doubling of tax rates on superannuation contributions for those earning more than $250,000 a year have also been deemed positives by the Institute.
“Together with a reduced concessional contributions cap, this raises an estimated $2.5 billion for the Federal Budget over the forward estimates,” Smartt said.
Despite the changes to Transition to Retirement (TTR) policy, the Institute highlighted the adverse effects on average to middle income earners will work against the original intent of TTR and no longer encourage people to work longer.
