Federal Election 2019: Bill Shorten retiree tax will fail, experts say

Bill Shorten’s “retiree tax” will fail to raise the windfall he expects, superannuation experts say, because it can be easily evaded.

Exclusive: Bill Shorten’s “retiree tax” will fail to raise the windfall he expects, experts say, because it can be easily evaded.

“Labor won’t get the money they think they will”, said one of super’s top minds, RiceWarner founder Michael Rice. Other experts share that view.

Those who can afford good advice will beat the change, Mr Rice said.

“You can avoid it,” he said, adding that in his view the policy was “unfair” and “badly introduced”.

“It doesn’t impact as much on the people they were targeting,” Mr Rice said.

Plato Investment Management chief Don Hamson said: “It’s quite regressive.”

Both he and Mr Rice said people who faced losing the refunds attached to their Australian share investments, may well sell shares and buy overseas stocks in response.

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Retirees will be hit hard by the plan. Picture: Supplied

Focus Superannuation Services founder Sharon Osborn the move would hit “mums and dads with ordinary jobs who have really scrimped and saved”.

“They live in suburban houses and drive a Toyota and thought they were doing everything to not rely on the government in their retirement,” she said.

“They are certainly not what you would describe as uber-rich.”

“It is going to cause a lot of people to make really bad decisions” unless they get professional guidance, she said.

For example, Dr Hamson warned that senate inquiry that some might try to salvage their refunds by spending down their nest egg to get under the limits in the pension assets test.

The plan could have other repercussions we won’t be prepared for. Picture: Supplied

Another super expert, Dixon Advisory managing director Nerida Cole, said some people may consider purchasing a more expensive property for the same reason because a person’s principal home is not included in the assets test. Ms Cole strongly advised against this.

“Sometimes $200,000 is gone just from the changeover costs,” she said. “It’s a false economy.”

All experts consulted by this masthead advised waiting to see the detail of Labor’s policy — and whether it can get it through parliament.

“People should wait,” Dr Hamson said.

To help minimise the impact on individuals, Professional investors are taking action now.

Australia’s biggest listed investment company AFIC sold more than $100 million of Rio Tinto stock — 40 per cent of its stake in the mining giant — and used the money to pay a special dividend and return franking credits to its 130,000 shareholders. AFIC did not respond to a request for comment.