Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 156

Retrospectivity ain’t what it used to be

'Retrospective' has become the riskiest word in the election campaign. It’s easy not to take sides in the superannuation retrospectivity debate because both major political parties are obfuscating. In recent months, both have explained what 'retrospective' really means, and the policies of both meet their own definitions.

Let’s start with the words directly from our leaders in recent months:

Scott Morrison said

On Thursday, 18 February 2016, at 4.45pm, I sat about 20 metres away from Treasurer Scott Morrison while he presented to the SMSF Association National Conference in Adelaide. I wrote this article and his exact words are here. He said:

“One of our key drivers when contemplating potential superannuation reforms is stability and certainty, especially in the retirement phase. That is good for people who are looking 30 years down the track and saying is superannuation a good idea for me? If they are going to change the rules at the other end when you are going to be living off it then it is understandable that they might get spooked out of that as an appropriate channel for their investment. That is why I fear that the approach of taxing in that retirement phase penalises Australians who have put money into superannuation under the current rules – under the deal that they thought was there. It may not be technical retrospectivity but it certainly feels that way. It is effective retrospectivity, the tax technicians and superannuation tax technicians may say differently.(my emphasis)

There was little doubt among delegates that we had just heard the Treasurer say there would be no changes to super rules in the retirement phase.

What is most notable here is that the Treasurer actually defines retrospectivity: “… under the deal that they thought was there … It is effective retrospectivity.

Bill Shorten said

Five days earlier, on Saturday 13 February 2016, Bill Shorten gave a press conference where he said:

“I'm old school, brought up with the principle that laws should not be retrospective. If you've entered into financial arrangements and investments based on current tax law, I don't believe you should retrospectively change that law. In other words, when you make a new announcement in the future, it shouldn't change the circumstances of the people who are already invested under the old law.(my emphasis)

Some other definitions of retrospectivity

Looking back on or dealing with past events or situations.” Oxford Dictionaries

The term is used in situations where the law (statutory, civil, or regulatory) is changed or reinterpreted, affecting acts committed before the alteration.” Wikipedia.

The Australian Government’s own Australian Law Reform Commission (ALRC) has issued a note on retrospective laws which includes the following common law interpretation (courtesy of ‘bigjulie’ in our comments section):

“People should generally not be prosecuted for conduct that was not an offence at the time the conduct was committed. More generally, it might be said that laws should not retrospectively change legal rights and obligations.”

John Daley of the Grattan Institute put it this way:

“’Retrospectivity’, a legal concept, applies if a government changes the legal consequences of things that happened in the past.”

Both political parties are arguing their own policies are not retrospective.

What are the major changes in super policies?

Consider the two policies of the parties for capturing revenue from large super balances:

Government proposal

The Government has a $1.6 million ‘transfer balance cap’, described in full here. It states:

“From 1 July 2017, the Government will introduce a $1.6 million cap on the total amount of superannuation that can be transferred into a tax-free retirement account … Superannuation savings accumulated in excess of the cap can remain in an accumulation superannuation account, where the earnings will be taxed at 15 per cent … Subsequent fluctuations in retirement accounts due to earnings growth or pension payments are not considered when calculating cap space … Individuals who breach the cap will be subject to a tax on both the amount in excess of the cap and the earnings on the excess amount.”

In addition, there is a new lifetime cap on non concessional contributions (NCC) of $500,000, capturing amounts contributed backdated to 2007.

Opposition proposal

The Opposition’s policy is linked here. It states:

“The proposed measure would reduce the tax-free concession available to people with annual superannuation incomes from earnings of more than $75,000. From 1 July 2017, future earnings on assets supporting income streams will be tax-free up to $75,000 a year for each individual. Earnings above the $75,000 threshold will attract the same concessional rate of 15 per cent that applies to earnings in the accumulation phase.”

As the table shows, the impact of the new taxes depends on the pension account’s earning rate and the amount in the account.

For example, at a balance of $1.6 million, the Government’s policy creates no additional tax liability, regardless of earnings. However, if the pension earns a healthy 10%, income of $160,000 is well above the Opposition’s $75,000 threshold, and the tax on the $85,000 excess is $12,750. In all the examples above, the Opposition policy raises more tax or nil.

How does the Government argue the policies are not retrospective?

Scott Morrison told the Canberra Press Club on 4 May 2016 (the day after the Budget), addressing the lifetime cap on NCCs:

“I don't believe this is retrospectivity but others can have whatever view they may wish to argue for. If people have contributed more than $500,000 up until this point, well we won't be asking them to take it out of their superannuation account. It will be able to remain in that account.”

Actually, he will require retirees to take money out of a pension account if it holds over $1.6 million. Mr Morrison went on to say:

“We are not taxing the earnings out of retirement phase accounts. We've set a limit on what can go into those retirement accounts. That's a different position and it's one I'm very comfortable with. I'm not uncomfortable with the fact that we put a cap on how much can go into a tax-free earnings investment made possible by the taxpayer. But I have not changed the tax treatment and nor do I propose to change the tax treatment of retirement phase superannuation accounts.”

But it’s not only how much can go into a pension account. That is arguably prospective. It is also how much can be left in a pension account.

Are the policies retrospective?

The most significant impact of the Budget announcements is the uncertainty they bring to superannuation savings plans. Everyone is affected by this uncertainty. It’s not possible to believe any statements on policy stability, making planning for the next 30 to 40 years problematic.

If we apply the test that it is retrospective if it changes the consequences of things that happened in the past, then both the Government and the Opposition are making retrospective changes.

The proposed transfer cap of $1.6 million is retrospective because it applies to amounts built up in the past under the prevailing laws. There is no grandfathering and retirees will be forced to withdraw the excess from pension accounts, with no ability to top up if the market falls.

The proposed NCC limit of $500,000 is retrospective because it imposes a cap and counts contributions made before the law was introduced, since 2007. As the Government is now finding, it is difficult to argue backdating a change to 2007 is not retrospective. Before Budget night, the after-tax contributions did not count towards a cap, but then they did. Any 50-year-old who delayed putting money into super while they paid off other expenses expecting to catch up before retirement will now not be able to build a substantial super balance.

The Opposition is introducing a tax on the earnings above $75,000 on existing pension balances that have been accumulated in the past under the existing rules, and so it is also retrospective.

For those who argue a technical point that the policies are not retrospective, let’s come back to the politicians:

Scott Morrison: “It may not be technical retrospectivity but it certainly feels that way. It is effective retrospectivity, the tax technicians and superannuation tax technicians may say differently.”

Bill Shorten: “… when you make a new announcement in the future, it shouldn't change the circumstances of the people who are already invested under the old law.

I guess that’s politics. It would be better if both parties admitted their policies were retrospective and convinced the electorate they are necessary changes for revenue and equity reasons.

Please have your say

Our survey asks whether you believe the $1.6 million transfer cap or $500,000 NCC lifetime limit are retrospective. Plus, we have identified 12 superannuation changes in Budget 2016 on which we would appreciate your views on whether you support or disagree with the change.

The survey is closed.

Alun Stevens
May 21, 2016


DB pensions paid from unfunded sources (e.g. politicians' pensions) will be taxed at marginal rates above $100,000 pa from 1/7/2017.

There is also significant modelling demonstrating the inequity and unsustainability of the current system. Read the submissions to the FSI (although it didn't officially consider tax) and the Tax White Paper.


The old RBL would be about $2.3m, but it applied to the total amount that one could have in super. The $1.6m only applies to the portion that will be granted tax free earnings in retirement. People can hold a lot more than that in superannuation in retirement. Just not tax free.

Alun Stevens
May 21, 2016

I must admit to being quite phlegmatic about all of this. I think anyone who believes that the tax on any portion of their earnings will remain unchanged forever into the future just because it was set at some rate in the past is, frankly, naive and foolish. It has never been thus and never will be.

The simple fact is that the tax rate payable on the earnings on retirement savings will increase from 1/7 2017. Earnings on retirement savings prior to that date will be unaffected. The tax increases are not retrospective. They are also not unexpected. Nor are they unreasonable.

It was obvious at the time of Costello's 2006 budget that his changes were unsustainable and inequitable. (And reflect that the proposed $500,000 NCC cap conveniently misses the $1m NCC that had to be in by 30/6/2007). I was at a board meeting the following day where the consensus was 'Enjoy it while you can. It's unsustainable and can't last'. We did enjoy it. It couldn't last. It didn't. And now it's over. Time to suck it up and get on with life.

We all plan for the rules as they are and then adjust those plans as the rules change. Time to change again. And remember that a retired couple with $7m still only pays about the same amount of tax as a worker earning $80,000 a year. The cream and roses continue. The roses are just deep pink rather than red and the cream not so thick.

Scott Morrison of course was always going to be cute with the choice of words. His track record is littered with similar examples. He has delivered on his promise not to increase the tax on pensions!!

May 19, 2016

An interesting piece but there's not a lot of discussion on what is surely the most retrospective of the policy announcements i.e. a tax defined benefit pension payments above $100,000. Adding to the retrospectivity is that this would apply to in-stream payments and there is typically no option for defined benefit pensioners to commute their pensions. While this measure is likely to apply to only small number of current retirees, it is still retrospective. Further, what is not known is the number of future retirees that will be affected by this measure. And never forget: defined benefit super is not a marginal legacy issue - one of five dollars of employer money into the system goes into defined benefit schemes.

May 16, 2016

For the government to argue that the proposed $ 1.6m cap and NCC limit is not retrospective is plain wrong. They would be much better explaining why they figured the existing rules were too generous and why they did not grandfather the changes. The danger in this is that next time they could impose a limit of $ 1.2m and tax at say 30%. That is why this retrospectivity is dangerous-- once accepted by political spin it can be the thin edge of the wedge.

A recently retired politician can retire with an indexed pension of $ 180,000 pa for life. That would require an amount in the retirement account of well over $ 4m. How come they will not be impacted by the proposed changes. No one in the media is prepared to ask this question and seek a reasonable answer from the government.

This one issue of retrospective changes will make people think twice about the system.

May 16, 2016

Phil Brady: The skinniness of the proposed pensions balance of $1.6 million can be explained medically. In the past, stout, fat and downright obese physiques were considered strong to withstand episodes of famine. With agriculture, industrial growth and food preservation,being skinny is now in. Hence your GP recommends skim milk rather than straight off the teats. The wasted frame of the taxpayer can no longer afford the compounded TRBL anymore.

Martin Mulcare: Great, look forward to the next Philosopher parliamentarian. Pity I am not in your electorate. Our 'restrospective' fixation is due to the desperate human need to find fault with labels when we disagree with the substance of the changes. As Vince Skully ably shows.

Who said truth depends on objective facts?

Vince Skully
May 16, 2016

I didn't hear too many people wingeing about retrospectivity in 2006 when Costello reduced the tax on retirement income.

Charles Moore
May 16, 2016

In an orwellien society which Australia is fast becoming its called "double speak". Our mistake is assuming there is a thinking entity behind any double speak, it does not need to make any sense..
We need a visionary like george orwell, that knew back in 1949, what our australian policticians would be like in the year 2016?
Perhaps we can apply the same process to all past and current politicians generous (fully tax payer funded) superannuation from say 2007, set the amount equal to the current pension (cannot have a elitist attitude here), and then tax them from 2007 for all amount in excess of the current pension? After its not retrospective....
It's is a retrospective duck, pure and simple.

Ben Smythe
May 16, 2016

I would be interested to understand from the Gov't what a retrospective change would have looked like if they believe the proposed $500k NCC cap is not a retrospective change?

Martin Mulcare
May 15, 2016

May I express my frustration? I am running as a local Independent candidate for Bennelong because neither major party has a coherent strategy in this context and neither can be trusted (as per Grahams' quotes). There is no attention to principles or substance in their political responses.
Let's look at the $1.6m cap announcement. That should be a trigger for an intelligent debate about the purpose of superannuation and whether some limits on tax concessions are warranted. Instead, it generates a red herring exchange on the meaning of "retrospective".
When can we expect "grown up conversations"? How can we promote them?

Phil Brady
May 16, 2016

I read that if the old Transitional Reasonable Benefit Limit was left in place it would now be at $2.3M. So, the $1.6M looks very skinny.

May 15, 2016

My wife and I are both over the limits for the $1.6M and the $500K NCC and these funds have been built up over many many years through hard work, sacrifices and some astute planning and investments. I think in many ways we are all missing the point. Its not about the limits on the amounts, its that we cannot trust governments. They waste it and then come looking for where they can take it away from the people who paid their taxes, employed staff and who have looked after themselves instead of being a burden on the welfare system and don't want to be. Under the rules prior to the budget announcements even with compounding interest and good investing I believe it would be difficult for a 30 something to contribute $25K a year plus the $180K NCC and achieve a $5M Super account by the time they are retiring. Its not until your 50's that you may have the spare money.
In June 2015 I received a newsletter from my local Liberal member (a very senior member of the front bench) with the heading on the front page "The Liberal Government has guaranteed there will be no changes to superannuation and certainly no double tax hit". I wrote to him asking clarification and received the following reply:

" I am happy to confirm to you that the Coalition Government has no plans to increase taxes on superannuants, either in this term or in the future. Indeed, the Prime Minister confirmed this on July 1, remarking that the Liberal Party made a very clear commitment prior to the last election that there would be no adverse changes to superannuation under this Government in this Parliament. We have made a very clear decision that we aren't ever going to increase taxes or restrictions on super"

Of course now they have a new leader. I have since written to my local member stating that we will no longer be voting for him as he can't be trusted.

May 14, 2016


Howard Costello regime made all post 60 benefits tax-free. Till then the members had accrued benefits with pre and post tax contributions and earnings thereon fully expecting to pay tax. Then all of a sudden the past promise was changed in their favour and the detriment of the taxpayer.

Did you, I or any other fund professionals protest this gross injustice? No, don't answer, the reply inheres in the rhetorical question.

Despite the undoubted reach back into the past, all changes ('reforms' if favourable; 'tinkering' if complicated; 'toxic' if it reduces our share) will impact past expectations.Even the proposed increase in SG rates has the employer groups protesting the administrative and financial burden. Fair from their perspective.

As in other walks of life, we have to reassess and play by the revised rules. Or, as many will, find loopholes to circumvent. This is fair game for future Treasurers.

As for your Judas analogy, without Judas, there would have been no betrayal, no crucifixion nor mankind's redemption (per the Bible)! Almost as inscrutable as super....

May 14, 2016

It is immoral duplicity to change the conditions re super for PAST events. The retrospective adjective is irrelevant as it obscures the deceit, the smarmy treachery & Cromwellian dupery of this tilt to perdition.

The fraudulent impact of this financial train to Hades is that we were actually duped sheep and alas, now, awaiting sequential financial slaughter.

We were promised by numerous red and blue governments:

"Support yourself - do abcd and we will do xyz".
"But" we asked, "is this a trap?"
"No, put your savings into super to save the taxpayers the burden of paying you a pension. Plan when and how you retire - rely on MY word as Treasurer of this great (sic) country".

So now because these deposits are open targets to be grasped by government sticky fingers, those precious savings will be safer under the bed or off-shore benefiting other countries infra-structures.

The betrayal of those who scrimped and saved predicated upon the false promise is gargantuan and merely a warning signal canon and prelude to further raids.

To those legislators who intend to vote for this Judas beguilement:
Shame upon your fame.
A pox on your wallet.
Yes, we were fools to trust you.
Mend you own lavish ways first but always honor past contracts with citizens.

May 14, 2016

It is natural for sectors in our retirement income regime (savers - accumulators pensioners and hybrid, providers, white-label owners outsourcing all activity, planners, professionals providing independent assurance, technical advice and helping clients game the rules, regulators who must make rules ahead of crises and are scared of another failure, policy-makers who must balance all the claims in three year elections...) to push their own interests.

It would be good if we could have a lobby group for taxpayers who fund the subsidies, and oil the machine. Governments become their default proxy.

Take Rick's list of issues. It accurately lists shared negative perceptions, but unfairly omits any positive. Relative to most countries, our compulsory and concessional saving model has avoided the insolvency rampant elsewhere. It has firmly sheeted home the responsibility to where it belongs (citizens) , with tax subsidies to help.

Was the Government equally untrustworthy when it introduced unsustainable concessions being partly unwound now? Like an employee keeping quiet when overpaid but whingeing when it is partly clawed back, we moan as we can.

Viewed sectorally, and in the heat of the present, many grievances are legitimate. Given super's inter-generational reach over six or seven decades, I think history will judge Australia's attempts more generously, for all its irksome faults.

Andrew Krantz
May 14, 2016

Grandfathering should have applied and then it would have been prospective. Without grandfathering it is retrospective. It has negatively affected many of my clients and all people with transition to retirement pensions.
To date have voted liberal but not any more. This is a significant breach of trust. As politicians do not have the same super system as we do they don't have skin in the game and will constantly fiddle detrimentally with the super system. A poor strategy from the government who long term want people to fund their own retirement

May 14, 2016

I think it is more about the trust issue and how the government acted. This has undermined confidence in the system for all generations. It appears the treasurer wants people on middle income to borrow for negatively geared property to reduce their tax and speculate on future capital gain instead of wisely saving. We are now looking at other structures and locations that hold less government risk. I am not sure I want my hard earned in the super system

May 13, 2016

Interesting to read all the comments. I am scheduled to give a superannuation seminar next week to members of a super fund. The fund has 100 members with an average age of 30 and an average balance of $30,000. According to the Colonial First State website, assuming an average salary of $60,000, 9.5% employer contributions and an average return of 7.5% pa, they will only end up with enough money to deliver $42,861 a year in today’s dollars before it runs out when they are 75. It seems unlikely that this will deliver a comfortable lifestyle considering the average life expectancy is north of 83 and the line-up of expenses these generations face.

There are many issues here. Firstly, the government is seen to be completely untrustworthy which is driving Gen X and Y away from even thinking about how they fund their post working life. Secondly, with the spiralling cost of housing, mammoth indebtedness, etc, there seems little chance that Gen X and Y will be able to make significant additional contributions. Thirdly, with one in three families reportedly getting more in benefits than they pay in tax, there is much more pain in the pipeline. Lastly, tax free pensions were never going to last - we all knew that - but to claim the changes are not retrospective is weasly in the extreme.

May 13, 2016

I am over the new NCC limit. So no more NCC contributions.
I don't follow the new CC rules? It appears the work test for over 65s has been dropped, and $25000/year can be contributed. I am over 65 (and under 75) and am retired. Can I still make a yearly CC of $25000? This money is obviously coming from after tax savings, not wages. What are the tax implications? I am still under the $1.6m cap.
Clarification welcomed. Thanks.

May 13, 2016

Reasonable retirement outcomes depend largely, but not solely, on super balances. Non-super assets and even non-financial networks cannot be excluded.

One consequence of the seemingly harsh proposals (if they are enacted) might be to increase the incidence of reverse mortgages.

Given that finance is increasingly global in its content and reach, perhaps we should consider what role adult, financially capable, offspring should play, instead of outsourcing this to the taxpayer. Shall we introduce Confucius to Keating?

Sally B
May 13, 2016

Let's do the sums ...
Say a 40 year old starts contributing the max $25k per year till retirement.
Say the elderly dad/mum die and leave the 30yr old $500k in their will.
NCC = $500k.
Total superfund would be 25yrs x $25k plus $500k.
Balance is $1,125
"Just enough" for a comfortable retirement (at 4% avge interest income).

This is the max super balance, as most workers would not be able to put away $25k pa now could they count on $500k NCC's.
Therefore this policy does little to help youngsters out, and especially so given the loss of confidence in government and their inability to resist changes to super rules.

Keep the $35k pa concess contrib.
Lifetime cap of $1m NCC's going back to 2007.
Tax of 15% pa on earnings above $100k on the pension balance.

May 13, 2016

Sally - you've missed the massive effect of earning on those contributions. During a working life, earning can be 300%the value of contributions. Even more amazing, earning after retirement can be a further 600% of the initial contributions. Youngsters have every opportunity to build up very healthy balances well within-the caps - it is their ability to earn and save that will cap most people.

May 13, 2016

It is high time that politician's own super had to abide by the same rules as the rest of us.
They have very generous CPI indexed risk free super in perpetuity that's not tinkered with every couple of years.
Since their interests are not aligned to ours when it comes to retirement income they don't feel the same pain when yet again the rules are changed.
The only pain they feel is at the ballot box .
For the first time in his life this staunch liberal supporter will not be voting for the coalition as fortunately I have an independent I can vote for.
Disgusted and dismayed!

May 13, 2016

If we think its unfair that a couple that have more than about $4.5m put away for their retirement have to start to pay 15% tax on the earnings, we have lost all connection with reality.

A well advised couple would hold say $700k each of their lowest earning defensive assets each outside super (and pay very little tax thereon due to the tax free threshold) and $1.6m each in their pension account. That would be a total for the couple of $4.6m invested tax free. Lets assume they were really rich and had another $4.6m in accumulation accounts, total invested $9.2m. They would pay 15% tax on the earnings on that money, giving an average tax rate of 7.5% ($4.6m tax free, $4.6m at 15%).

And yet many of us are bleating that its unfair!

No its not - it was ridiculous that we could have that much money previously tax free. Now having to pay 7.5% tax on the earnings on such a huge nest egg is still a very highly concessional arrangement.

Most of the changes are totally appropriate. The only group I feel sorry for are those in their late 40's to 50's with relatively low balances who are just starting to get their heads above water from the mortgage and the cost of kids who had a plan to pump lots of money into super in their last 15 - 20 years. They are going to really struggle to get more than $1.6m into the super system with a lifetime limit of $500k.

Its time to move on guys, accept that the overall direction is right, and both parties are doing the right thing for the country. Forget our self interest, and start to pay a little tax - it won't hurt us too much!

Phil Brady
May 13, 2016

I don't understand how you can say the direction is right, and acknowledge that those in their 40's and 50's are significantly disadvantaged. It is that demographic that pay the most tax now under PAYG, and it is also the next generation after that. Also the 40's and 50's year olds have had to deal with the rising cost of decent schooling because Govts are not funding that as well as the past and they want their children to have every advantage. You can only bleed them for so long, and this is another hit.

Been there B4
May 13, 2016

Following the rules of the land, over many years my wife and I have applied our assets to investment in our SMSF. We have made NCCs beyond the $500k Cap and our Member Balances are north of $1.6M. Also a large proportion of our assets are in companies paying franked dividends. One outcome is the SMSF receives from the ATO a sizeable franking credit rebate each year.

Whilst I argue against the $500k NCC Cap (measly for younger folk building up their retirement nest egg), I think the RETROSPECTIVITY issue is a furphy. My understanding is that under the Government's proposal, members of Super Funds can retain balances in excess of $1.6M in Accumulation mode, with the income lightly taxed at 15%. For these fortunate people this is hardly a disaster.

Phil Brady
May 13, 2016

Yes but as you point out it is the next generation who will not be afforded the opportunity that you had that has got you to a position that you can now 'wear' the change that effects you.

May 13, 2016

As with a number of other commentators, the author has been highly misleading with his table regarding additional tax.

Firstly if I ended up with $2M in super, I would be
a) splitting the amount above $1.6M with my partner or b) withdrawing the excess and investing the $400K outside super . If that earned $20k, I would only be paying tax on the $2k above the $18k tax free threshold.

Secondly, so many commentators appear to not understand what "earnings" inside a super or pension actually are. I have seen comments which
i) Think it is the amount I draw down from my fund _ NO!
ii) Think it is the amount that it goes up by each year_NO!
iii) It is actually the sum of the interest, dividends (adjusted for imputation), rents, and discounted realised capital gains.
If the author can get 5% taable return let alone 10%, please let us all know how you do this in a low risk fashion

May 12, 2016

Assuming $1.6 million limit instituted what is position of someone who currently has, say $2million.?The announcements indicate they will have to reduce balance to $1.6million or less on 30 June 2017. But they will not know balance until sometime afterwards. Should not Government give some appropriate period (say 6 months to withdraw excess over $1.6 million? (and what happens to defined bebefits pensions?

May 12, 2016

Its important to have trust in any relationship (including our relationship with politicians and political parties) who are now asking us to vote for them on July 2.

Trust went out the door on Budget night. Which ever way you look at the proposed super changes re the introduction/changing of caps, they are retrospective, regardless of politicians "spin". In previous years, we had "grandfathering" to ensure those who had planned for their retirement under the rues of the day, particularly as self funded retirees, were not adversely affected by future policy changes.

I am amazed that a conservative government would try this subterfuge, particularly as it will lead to more people accessing welfare benefits including the aged pension. And we are meant to trust and vote for these people??

May 12, 2016

I suspect what most are really complaining about is being worse off than they were before. Retrospective legislation is simply a convenient supporting argument. When these overly generous super concessions were brought in years ago, there were lots of people made worse off by the reduction in revenue causing a reduction in government services. Didn’t hear the beneficiaries complaining about that retrospective legislation.

Rules in life are changing all the time. You make decisions based on the current rules. If the rules change you re-evaluate your decisions based on the new rules. Super isn’t any different. As my kids would say, get over it.

Phil Brady
May 13, 2016

I do agree with that somewhat Graeme, but as per what Jack said above and the article, it has all but been set in stone by the current government that no changes would be made retrospectively - therefore the issue is a breach of trust. Gullible? Yes to believe them in the first place I guess but the country needs leadership it can actually trust and get behind to get confidence going in the economy - we've simply had too long without it, and this to me is another step backwards.

John Griffin
May 12, 2016

If two members of a SMF have say $1.5m in each account, what options are open to the remaining spouse should one partner die? What taxes on the withdrawal of on excess monies over $1.6m would apply should the remaining partner be only able to add $100k to their account?

May 12, 2016

People think this is about rich baby boomers bleating about a new tax. It isn't. It is about the people in their 40s and 50s who have just had their aspirations of a comfortable retirement taken away from them. These new caps on concessional and non-concessional contributions make it impossible to accumulate enough retirement savings.

They will never trust super or the meddling politicians again. This is a breach of trust.

Graham Hand
May 12, 2016

Hi Jack, great comment. It shows this issue is not only old farts like me complaining because we've lost a generous benefit, but the super balances of the next generations are compromised.

Chris Eastaway
May 13, 2016

"These new caps on concessional and non-concessional contributions make it impossible to accumulate enough retirement savings."

No they don't. Super is a tax structure, not an asset class of its own. You can still accumulate more than enough assets over a lifetime to be self funded in retirement. That was the case long before 1992 and will never change. The devil is in the detail as always and people are only now beginning to see that superannuation is a contract between two partners, you and the government. I've always found the legislative risk of entrusting my savings to the government to be unacceptable and so I don't contribute any more than necessary but at 33 I'm not one bit concerned that I won't have enough when I choose to leave the workforce. I might have to pay tax along the way, but is that so terrible?

May 14, 2016

That is the crux of these new rules. As an adviser I now have to warn every younger client that rules may be changed retrospectively so they have to hedge their bets with alternative back-up strategies.

May 12, 2016

To quote Alice in Wonderland, words mean what they say, no more or no less. Politicians defaulting into political pedantry treating the public as pawns, would be comic if they had not been herded into preserved savings. This has often meant paying capital gains taxes in moving listed securities as contributions in specie.

How about requiring both parties to legislate, for example, that any taxpayer found by ATO cheating on taxes can provide a copy of their un-lodged returns to prove all income was declared, it is just that the technical requirement to lodge the correct return was missed? The ATO would choke on it (and the Panama-listers would kill for it).

Ironical that in super, required to be held as trusts, trust has become a collateral casualty. The smoke we see on the horizon? It is the Keating vision going up!

Sample Survey Response
May 12, 2016

A retrospective action is to undo what has been done. This policy would be retrospective if you were required to take out of super amounts about $500,000 (rather than not be allowed to keep adding amounts above the $500,000). To argue otherwise is ridiculous. Having said that, do I like it? Not one bit. Might it make me bit vote for the socialists? Perhaps it will.

May 12, 2016

But you are required to 'take out' amounts greater than $1.6m. Therefore it is retrospective

Sample Survey Response
May 12, 2016

I structured my SMSF investment strategy based on no tax in pension mode. It is proposed to cap this at $1.6m going forward and have effectively signalled to independent retirees that they cannot be trusted to evolve consistent superannuation policy.The current arrangements should have been fixed for existing SMSFs.

May 12, 2016

Malcolm Fraser said people will be wiser hiding their money under the bed. If you cannot trust government to not pillage your nest egg..... either hide it under the bed or ... join the inevitable flight of capital overseas?

Sample Survey Response
May 12, 2016

some retirees already have more than that in their ABP or are working towards having that. I believe any caps should be prospective - ie on new pensions commenced after a specific date, but that pensions in existence at that date should continue to enjoy exemption. Administratively complex, I know, but that is the nature of our super system

Sample Survey Response
May 12, 2016

We cannot continue with the far to generous old system.

Sample Survey Response
May 12, 2016

The rules obviously affect strategies that were implemented before the Budget - therefore they are retrospective.

Michael O'Neill
May 12, 2016

So I'm a mug who throughout his working life, both pre and post compulsory super, made contributions so that I would, if I lived long emough, not call on the workers paying tax to fund my retirement years. Some years ago as I was contemplating retirement , my accountant warned me not to trust what politicians said as nothing was for ever, especially when spoken by said either side of parliament. Now comfortably retired and, fully self funded with hopefully a minimum of 20 years to live, I find my trust in politicians was foolish at best and downright stupid.

How can anyone plan if you have people such as we have making tax issues retrospective rather than grandfathered. I was a fool to save and should have simply bought the exotic sports car when it took my fancy, travelled to Aspen annually to ski the slopes.

Now a question to both sides: If you went intp a supermarket and at the checkout the operator advised you were to be charged a make up margin for goods bought since July 2007, what would be your reaction? You would not go back, would you!

Simple message to Shorten and Turnbull: get your sticky little fingers off of my hard earned savings because neither side is worth a vote.

May 12, 2016

Personally I take very little or no notice of what our local politicians say – before, during, or after elections. Not sure why anyone would. What ends up being legislated is important of course, but that could be months away, if ever, and even then it is full of trade-offs and modifications anyway.

Phil Brady
May 12, 2016

Superannuation should be taken out of politics and only have amendments if there is bipartisan support and then agreed by an independent tribunal of some sort. Its just too important a piece of people's lives these days to have the issues we have with it and constant change. If there are trade offs to come, then it is poor politics to come out with the announcements all guns blazing, particularly after the 'no changes' rhetoric. It's really frustrating. I've done the survey - to me its retrospective.


Leave a Comment:



It’s time to do things differently in retirement policy

Retirement Review gives strong views on hoarding of super

The need for retirement income reform


Most viewed in recent weeks

Lessons when a fund manager of the year is down 25%

Every successful fund manager suffers periods of underperformance, and investors who jump from fund to fund chasing results are likely to do badly. Selecting a manager is a long-term decision but what else?

2022 election survey results: disillusion and disappointment

In almost 1,000 responses, our readers differ in voting intentions versus polling of the general population, but they have little doubt who will win and there is widespread disappointment with our politics.

Now you can earn 5% on bonds but stay with quality

Conservative investors who want the greater capital security of bonds can now lock in 5% but they should stay at the higher end of credit quality. Rises in rates and defaults mean it's not as easy as it looks.

30 ETFs in one ecosystem but is there a favourite?

In the last decade, ETFs have become a mainstay of many portfolios, with broad market access to most asset types, as well as a wide array of sectors and themes. Is there a favourite of a CEO who oversees 30 funds?

Meg on SMSFs – More on future-proofing your fund

Single-member SMSFs face challenges where the eventual beneficiaries (or support team in the event of incapacity) will be the member’s adult children. Even worse, what happens if one or more of the children live overseas?

Betting markets as election predictors

Believe it or not, betting agencies are in the business of making money, not predicting outcomes. Is there anything we can learn from the current odds on the election results?

Latest Updates


'It’s your money' schemes transfer super from young to old

Policy proposals allow young people to access their super for a home bought from older people who put the money back into super. It helps some first buyers into a home earlier but it may push up prices.

Investment strategies

Rising recession risk and what it means for your portfolio

In this environment, safe-haven assets like Government bonds act as a diversifier given the uncorrelated nature to equities during periods of risk-off, while offering a yield above term deposit rates.

Investment strategies

‘Multidiscipline’: the secret of Bezos' and Buffett’s wild success

A key attribute of great investors is the ability to abstract away the specifics of a particular domain, leaving only the important underlying principles upon which great investments can be made.


Keep mandatory super pension drawdowns halved

The Transfer Balance Cap limits the tax concessions available in super pension funds, removing the need for large, compulsory drawdowns. Plus there are no requirements to draw money out of an accumulation fund.


Confession season is upon us: What’s next for equity markets

Companies tend to pre-position weak results ahead of 30 June, leading to earnings downgrades. The next two months will be critical for investors as a shift from ‘great expectations’ to ‘clear explanations’ gets underway.


Australia, the Lucky Country again?

We may have been extremely unlucky with the unforgiving weather plaguing the East Coast of Australia this year. However, on the economic front we are by many measures in a strong position relative to the rest of the world.

Exchange traded products

LIC discounts widening with the market sell-off

Discounts on LICs and LITs vary with market conditions, and many prominent managers have seen the value of their assets fall as well as discount widen. There may be opportunities for gains if discounts narrow.



© 2022 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.