From 1 January 2016, the level of income from defined benefit superannuation that can be excluded from the pension income test will be capped at 10 per cent, the SMSF Association said.
The government estimates that around 65 per cent of income support recipients with payments from defined benefit superannuation have deductible amounts of 10 per cent or less, which is expected to raise $465 million over the forward estimates.
“This measure tightens a loophole which allowed superannuants with defined benefit superannuation to access the age pension, even when they had significant defined benefit income streams,” the SMSF Association stated.
“It will be interesting to see the detail of which defined benefit pensions will be impacted by this measure.”
Despite labelling the move surprising, the SMSF Association’s senior manager for technical and policy, Jordan George, told SMSF Adviser it will only affect a “very small” number of superannuants who have a defined benefit scheme from which they are receiving a defined benefit pension.
Defined benefit schemes for Vic public servants closed in the 1980s/90s. Many public servants are getting far less than the $58,000 considered for a comfortable living. So they need at least a reasonable part aged pension. How has Jordan George calculated it is a ‘very small’ number. As interest rates rise it will leave more and more public servants omitted from the aged pension