Older Couple Confused By Super Changes

The New Super Rules

In the past week, Parliament have passed the most significant superannuation reforms in a decade.

These new rules make our retirement savings system more complicated and make it even more important to get the right advice for your circumstances.

Below is a simplified summary of the new super rules that come into effect on July 1, 2017…

Pre-Tax Contributions to Super

  1. Cap of $25,000 per year for everyone
  2. From July 1, 2018, you will be able to make ‘catch-up’ contributions or a rolling five-year basis if your super balance is less than $500,000
  3. If you earn more than $250,000, there is a 30% tax on contributions
  4. A refund of tax paid on contributions is available if you earn less than $37,000 p.a.

After-Tax Contributions to Super

  1. Contribution cap of $100,000 a year if your total super balance is less than $1.6 million
  2. Bring forward rule still applies for up to 3 years ie 3 x $100,000 = up to $300,000
  3. Tax offset for spouse contributions if your spouse earns less than $40,000

Pension Phase

  1. Transfer a maximum of $1.6m into pension phase from accumulation phase
  2. Fund earnings remain tax free in pension phase
  3. Pension payments remain tax free from age 60

Transition to Retirement Pensions

  1. Fund earnings now taxed at up to 15%
  2. Pension payments remain tax free from age 60

In practical terms

The main action you may want to consider taking if you have the means by June 30, 2017 is to contribute up to $540,000 (3 years x $180,000 current bring forward rule) into Super before the bring forward rule is reduced to $300,000 as referred to above.

Depending on your circumstances if in Transition to Retirement phase….

One option may be to considering rolling back that money to accumulation phase as the tax benefit is now gone.

The other option may be to consider retiring prior to June 30, 2017 so that you start a permanent pension thereby giving yourself the benefit of paying 0% tax on your fund earnings and pension payments.


If your super balance is over the $1.6 million tax free ceiling, it may be worth considering taking that money above the ceiling out of super and making investments directly (ie outside super) as the tax benefit of super for that portion of money is no longer there.

If you are one of the 44,000 Australian’s who have more than $1.6 million in super, this might be a minor hassle but it is certainly a good problem to have!!

Dean Mico is an independent financial planner.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

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