The change would hit more than the government’s apparent target of wealthier, big-balance fund members, according to Rice Warner.
Rice Warner estimates that members hold 580,000 TRIS accounts, supported by at least $40 billion in superannuation assets, as at June last year. Approximately half the money is held in SMSF accounts.
“The average balance of $69,000 is a modest average balance given that members receiving TRIS pensions are aged 56-64, with many holding the bulk of their super savings in pensions to maximise the current tax exemption,” Rice Warner said.
“Among the clear winners from this budget are the specialist financial superannuation advisers whose guidance should be in high demand – including in regard to TRIS pensions,” Rice Warner added.
“Those who do not feel that they can afford this advice, and are not in a position to understand an increasingly complex system for themselves, may find that their retirement outcomes fall well short of what they could have achieved.”
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People will have to look at other accumulation strategies. The use of self gearing comes to mind.
Rice Warner are correct. There are a lot of people in the 56-64 age bracket using TRIS as the government originally intended. Reducing the cash flow of the pension account by imposing a 15 per cent tax without reducing the minimum pension percentage will impact significantly on pension account balances. This will therefore impact the ability of many to self fund into there mid 60’s and beyond.