The Financial Planning Association has told the Federal Government it strongly disagrees with proposals around the Work test exemption for recent retirements, particularly the proposal to introduce a new ‘total superannuation balance’ limit of $300,000.
In a submission filed with the Federal Treasury, the FPA said that while it was supportive of the intent of the policy to allow people aged over 65 to continue contributing to their superannuation and building their retirement savings, it believed the Government’s draft regulations limited the scope of the measure and added complexity.
“It does not simplify the rules of the system for Australians which will not help to improve consumer engagement with their superannuation,” it said.
“We disagree with the proposal to introduce a new ‘total superannuation balance’ limit of $300,000 for this measure, which will significantly increase the associated implementation and administration costs for funds and members by creating another tier of ‘total super balance’ that needs to be observed (i.e. various measures already hinge on limit of $500k, $1.4M, $1.5M, or $1.6M), adding to the complexity of the system,” the FPA submission said.
The FPA said that if the Government persisted with the ‘total super balance’ limit for the measure, it recommended aligning it with a limit for the bring-forward arrangements for non-concessional contributions in the Income Tax Assessment Act 1997, by increasing the limited from $300,000 to $500,000.
“We are also concerned with how this measure will interact with and impact on the bring-forward arrangements of the non-concessional contributions cap,” it said. “There is already a level of complexity when it comes to making a non-concessional contribution and triggering a bring-forward arrangement on or after a client’s 65th birthday.”
“These rules are complicated and not well understood. Introducing additional rules preventing the ability to trigger a non-concessional contribution bring-forward arrangement when making a contribution under the proposed work-test extension measure, will only add further complexity,” the FPA submission said.