Superannuation reforms have generated a lot of inquiries in our Perth office. We want to take this time to thank you all for your inquiries and to provide a short guide to the more important parts of the reform and how they will affect you. Remember that our information is general in scope and that we can’t provide blanket advice because every investor’s situation is different.
Any new Superannuation Fund started as of 1 January 2015 will be subject to the new deeming rules. The rules have changed the Age Pension income test, effectively double-counting any superannuation assets when assessing income. Since many Australians will still be depending on their Age Pensions as a significant part of their retirement income, the changes could potentially be devastating to many retirees.
The mechanics of the assessment are complicated and explaining them here is not the purpose of this piece. The net effect is that a lot of Australians could collect less money during retirement due to the changes.
Who Will Be Affected?
It is important to know whether or not your superannuation fund will affect your Age Pension income test in the future. If you are already receiving the Age Pension now or begin receiving it before 1 January 2015, you will be exempt from the changes and your Age Pension income test will continue under the old rules.
However, if you are being assessed under the old rules and change your superannuation after 1 January 2015, you will be subject to the new rules. If you commute your superannuation fund on or any time after 1 January 2015, you will be subject to the new deeming rules. If you begin receiving your Age Pension on 1 January 2015 or any time thereafter, you will be subject to the new rules.
Talk to Approved Financial Planners
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