“About 560,000 Australians use transition to retirement pension arrangements. And they’re definitely not all wealthy,” said Charlie Viola, Partner, Pitcher Partners Sydney.
“It seems clear to us that in the rush to develop a policy on superannuation, the impact of this policy has been well and truly underestimated, and perhaps misunderstood.
“It’s arguable that the $1.6m cap on all pension types would have been a sufficient measure to ensure people with very large balances aren’t using the transition to retirement pension system as a tax haven.
“If the government was insistent on making changes to transition to retirement arrangements, the simple measure would’ve been to allow existing transition to retirement schemes to remain in place when superannuation balances are below the $1.6mil cap; this would have aligned all pensions and simplified the arrangements, while not disadvantaging those who use them for the intended purposes.
“This would still close the loophole on wealthy people using the scheme as a tax strategy, while not unfairly locking out hardworking Australians who legitimately use the transition to retirement scheme to wind down their careers.
“Unfortunately it’s just more evidence of hasty and poorly thought out policy in the superannuation space that reduces confidence into the system.
“Simplification of the system is important. We would not argue against the need to make sure that Australians have a fair and simple system that allows them to save for their retirement and reduces the cost burden on government.
“But these changes run the real risk of achieving the opposite effect by failing to provide an incentive for saving, and pushing people onto a government pension as a result.”
For further information please contact:
Charlie Viola, Partner, Pitcher Partners Sydney, 02 8236 7798
Sabine Wolff, Media and Communications Advisor, Pitcher Partners, 0419 529 577