Superannuation changes – what ADF members need to know
3rd April, 2017
You have probably heard or read recently that the Commonwealth Government has made a number of changes to the superannuation (super) system most of which come into effect on 1 July 2017.
What are the changes?
Some of the changes are likely to affect how ADF members plan for retirement. They include:
- Reduction of the cap or limit on concessional (before tax) contributions to super;
- Extension of the availability of tax deductions for personal super contributions;
- Allowances made for employees to make ‘catch-up’ concessional contributions;
- Reduction of the cap on non-concessional (after tax) contributions super;
- Establishment of a $1.6 million ‘transfer balance cap’ (for pensions); and
- Establishment of a defined benefit income cap.
Faced with the list above you may be wondering how it is likely to affect you. In summary:
- The changes, among other things, may make it less beneficial to you to make additional contributions to your super, either before tax (including through salary sacrifice) or after tax.
- The changes may also affect how your military pension is taxed and your ability to purchase other income streams once you retire.
- The changes may make your super arrangements and retirement planning more complex. The effect on you may not be straightforward to work out, depending on your individual circumstances.
What can I do about it?
Given the likely importance of your super to your comfort in and enjoyment of retirement we suggest that you:
- Get a basic understanding of the changes yourself:
- Seek independent financial advice from a financial adviser and taxation advice from an accountant if you have any concerns or questions about how the changes affect you personally.
- Seek advice urgently if you are:
- nearing retirement from the ADF;
- considering making any additional contributions to your super or your spouse’s super; or
- an MSBS member and you’ve reached or are nearing your maximum benefit limit (MBL).
The ADF Financial Advice Referral Program has a list of financial advisers who have undertaken to provide financial advice for ADF members on a genuine fees for service basis free from remuneration-based conflicts of interest such as commissions and asset-based fees.
Frank Lilley is Operations Manager of the ADF Financial Services Consumer Centre