The Federal Government is facing a growing backlash from planners and accountants as they dig deeper into the consequences of the Budget changes to superannuation with many describing the impact on their clients as "disastrous".
The planner and accountant backlash has come at the same time as some senior Government ministers have struggled to explain the Budget changes during the election campaign, with the Foreign Minister, Julie Bishop, acknowledging her lack of detail around the changes to Transition to Retirement (TTR) arrangements during a radio interview on Tuesday.
Brisbane-based adviser and mentor, Robert Ross reflected the views of many accountants and advisers who have contacted Money Management when he said the Budget changes had missed the mark and had placed many of his firm's clients behind the eight-ball in terms of seeking to meet their retirement income objectives.
He said that on the basis of an examination of his company's client files, the Government's targeting of upper income earners seemed destined to have unintended consequences by targeting professionals who had a serious need to top up their superannuation as they drew to the end of their careers.
"These are the professional people who are now over 50, did not earn a cent until in their mid-twenties because of education requirements — who then got married and had three kids — the youngest still at uni and who have had to pay off mortgages, private school education uni fees because their kids could not get HECS or any help because of parents income," Ross said
"These people expected to leave off saving seriously for retirement until their last 10 or 15 years of work life then to contribute $100,000 or more a year until they are 65 — hoping to get at least $1 million into super. After all they expect to live another 25 years after that."
"Some expected to contribute their inheritance when their parents die. That idea is now in ruins. The new cost of age care — introduced in July 2014 — with other quietly introduced income rules on 1 January this year — guaranteed to use up every penny the parents own — and now the caps on super — can only have one result. Ordinary Australians will need age pension support forever," he warned.
The warnings about the Government's approach have come as industry groups position to seek the negotiation of changes to the Budget super settings after the election, while actuarial research house, Rice Warner, has claimed few super fund members will be seriously affected.