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Financial planners to raise political heat over planned super changes

The Turnbull Government’s super proposals are emerging as a key election battleground, after Labor said it would oppose limits on super contributions

Financial Planning Association of Australia chief Dante De Gori said Treasurer Scott Morrison had failed to communicate the super reforms. Picture: Furtado Carlos
Financial Planning Association of Australia chief Dante De Gori said Treasurer Scott Morrison had failed to communicate the super reforms. Picture: Furtado Carlos

Financial Planners say the Turnbull Government has misread the electorate, who will be livid at retrospective changes to superannuation policy unveiled as part of the federal budget earlier this week.

Financial Planning Association of Australia chief executive Dante De Gori said the government had got it wrong on the retrospective nature of the reforms, which introduce a limit on non-concessional super contributions, backdated to 2007, of $500,000. The government capped the amount that can be transferred to the tax free retirement pension, affecting more than 100,000 people according to the Association of Superannuation Funds of Australia.

“These changes actually contradict the primary objective of superannuation,” Mr De Gori told The Australian.

“The government needs to really strongly consider the retrospective aspect of the $500,000 non-concessional lifetime cap,” Mr De Gori said. “I’d be urging consumers and financial planners to approach their local members and explain their situation and how it’s going to impact them,” he said.

“They’ve underestimated the impact that this is going to have on ordinary mum and dads who have done the right thing,” he said.

The retrospective proposals are now a key election battleground, after opposition leader Bill Shorten said the Labor has “very grave concerns about retrospective changes” in his budget-in-reply speech on Thursday.

Former Mayor of Penrith Pat Sheehy, who retired in 2008, said although the proposed changes didn’t affect his modest nest egg and were targeted at the wealthiest Australians, people would be angry that the government introduced retrospective laws targeting superannuation.

“I’d wish the bloody politicians would leave superannuation alone,” Mr Sheehy told The Australian.

“Retrospectivity in law making is totally wrong,” he said. “It’s completely and utterly wrong.”

The Turnbull Government’s proposed super reforms are looking to gain around $2.9bn in revenue from hitting the richest retirement kitties, aimed at financing concessions for low and middle-income earners. Plans include limiting people to $1.6m in their tax-free retirement balance, where savings above this will be taxed at 15 per cent in an accumulation fund.

Mr De Gori said confusion would turn to anger for many Australians who had complied with the historic superannuation rules.

“For the first time there are elements of superannuation reforms that are retrospective,” Mr De Gori said. “It’s unmatched and that sets a dangerous precedent for super changes.”

Mr De Gori said financial planners had been inundated with calls from angry customers and confused professionals after the changes were flagged. “We had a webinar on Wednesday and we had more than 1000 people register which is unheard of. And it’s not people just about to retire — it’s anyone who’s been preparing their superannuation over the last 10 years.”

Mr Sheehy, a former member of the Labor Party who represented Penrith City Council for more than two decades, said the ALP was defending the principle that retrospectivity was wrong.

“The retrospectivity is the real issue here. The number of people that are going to be affected by this will be relatively small, but the whole concept of making the laws after the event is wrong,” he said.

Mr De Gori said Treasurer Scott Morrison had failed to communicate the reforms. “Depending on what channel you were watching or which radio station you were listening to, everyone had a different interpretation,” he said. “To sum up the last three days, the theme is probably confusion.”

While the government said the Australian Taxation Office will be able to tell whether people have eclipsed their $500,000 concessional contribution lifetime cap, Mr De Gori said the “practical reality” was an 18 month delay in the accuracy of ATO records.

“In some cases our clients say they can’t access records before 2009. And people need to know their status now because the caps are in place as of budget night,” he said.

Read related topics:Federal Budget

Original URL: https://www.theaustralian.com.au/business/wealth/financial-planners-to-raise-political-heat-over-planned-super-changes/news-story/ba8f5baf7772618da0bbd0ceb621bac4