The Federal Government has announced sweeping changes to the superannuation system, it will save nearly $3 billion dollars and create a sustainable system for years to come, the ABC reports. The Government is set to impose a $1.6 million cap on the amount of tax-free super savings a person can hold in retirement, coming into effect from July next year. They have also capped after-tax contributions at $100,000 a year.
According to Treasurer Scott Morrison the reforms were fair and necessary for a sustainable system and the most significant changes to superannuation in more than a decade.
“This represents the most significant change to protect the flexibility and ensure the sustainability of superannuation in more than a decade,” he said.
“It will enable the system to be future proofed.”
The Governments initial changes to impose a $500,000 lifetime cap on after-tax superannuation contributions to the superannuation system in the 2015-16 budget faced backlash from Coalition backbenchers, with some Liberal donors so annoyed they proposed measures to possibly refuse to fund the Coalitions’s July re-election campaign. While some superannuation groups have welcome the changes coming into effect in July next year, the Combined Pensioners and Superannuants Association have stated the Government have caved into the super rich.
“We had to make the case and make the argument and we had to take it through the Parliament with our colleagues and work through all of those issues, but that’s the work of Government,” Scott Morrison said.
“It needed to be fairer, it needed to be more flexible.
“It needed to be more sustainable. We took the difficult decision to go and pursue that. And we took it to an election.”
Revenue and Financial Services Minister Kelly O’Dwyer said the changes would “level the playing field” for more than 800,000 Australians, who will be able to take advantage of their concessional contribution cap from July next year.