The Turnbull-led Coalition Government managed to hold on to power in July 2016 after more than a week of vote counting. In this article, we consider the implications of the new Coalition government for the superannuation industry.
The Coalition victory paves the way for the Government to prepare legislation to implement the major superannuation reform proposals announced in the 2016 Budget. Examples of those proposals include:
• Reducing the Division 293 threshold from $300,000 to $250,000
• Reducing the annual concessional contributions cap to $25,000 for all ages
• Introducing a $1.6 million pension transfer cap for tax exempt investment earnings
• Introducing a $500,000 lifetime cap on non-concessional contributions (effective from Budget night and including contributions from 1 July 2007); and
• Removing the tax exemption on investment earnings on assets supporting transition-to-retirement pensions.
It is probable that the Labor party will support most of these reforms although there could be some tweaking in the Senate.
The Coalition could also progress draft legislation that lapsed in the last parliament, including Bills to:
• Extend choice of fund to employees under workplace determinations and enterprise agreements (currently proposed to commence for agreements and determinations made from 1 July 2016)
• Require funds to publish product dashboards for their 10 largest choice investment options from 1 July 2017 and meet new investment holdings disclosure requirements from March 2018
• Require funds to have a minimum of one-third independent directors (including an independent chair) on their boards.
The proposed revisions are extensive. You may wish to refresh your memory of the implications of the Coalition’s 2016 Budget plans for superannuation funds, employers, and individuals.
The timeline for a 1 July 2017 start is also very tight for some of the proposals, so some changes could be delayed 12 months.
As always, Mercer is here to assist and guide you. There will be a lot to accomplish in the coming 12 months, and the time to start planning is right now.