The changes to the contribution caps, including a lifetime limit on non-concessional contributions of $500,000 and an annual limit of $25,000 on the concessional cap, will affect a significantly larger proportion of Australians than the government is suggesting, according to Dixon Advisory.
Similarly, the limit of $1.6 million for a pension fund acts as a further deterrent to investment in superannuation.
“While the government argues this limit will affect only a small number of retirees, the harsh reality is that many existing retirees will be affected by this change,” Dixon Advisory said. “The balance of their money will have to be switched to an accumulated account subject to 15 per cent tax on earnings, or withdrawn from the fund.
The Labor party alternative, which is to tax annual earnings on pension funds in excess of $75,000 annually at 15 per cent, could equally be a deterrent.
“Clearly, accumulating large amounts in superannuation will be a much more difficult strategy and, unlike with previous budget changes, there are limited opportunities to protect personal positions before the legislation is enacted,” Dixon Advisory said.
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Am I missing something: isn’t the headline contradictory to the story? When used as a verb “spiral” means escalating, increasing.
Indeed. Wealth has to be accumulated elsewhere once you reach the $1.6 million. Family trusts are not enough either. One has to look further afield.