Key features of final superannuation laws

A cap of $1.6 million is to be introduced on July 1 on the funds from which you can draw tax-free pension income.

The major retirement rule change is that a cap of $1.6 million is to be introduced on July 1, 2017 on the funds from which you can draw tax-free pension income. Under the new system, savers will be expected to move any funds over and above $1.6m out of their pension funding accounts into so-called accumulation accounts where the money is still inside the super system but will attract 15 per cent on earnings.

For savers using concessional (pre-tax) contributions — typically done through salary sacrifice — allowances will reduce. At present if you are under 50 it is $30,000. If you are over 50 it is $35,000. This will now change from July 1, 2017 to a single cap regardless of age of $25,000.

For savers using non-concessional (post tax) contributions, the current limit is $180,000 per annum. The new limit will be $100,000 per annum.

The ability to make three year’s worth of non-concessional (post-tax) contributions inside one financial year will remain in place, but at the reduced limits.

There is no lifetime cap proposed. The government announced a $500,000 lifetime cap earlier in the year. Following uproar concerning the retrospective nature of the concept, the idea was withdrawn and is not part of the new legislation

Beyond these changes are a small range of exceptions, relating largely to those who own small businesses.