I had no idea where my lost super was or the names of the funds. I just new it was scattered everywhere and I should definitely have more than $3,000 in my super. Australian Super Finder found all 7 of my funds and now my balance is almost $50,000. Thank you so much for getting my super back on track. ? Leonie, Thomastown VIC

Super Facts and Tips

Does the Government Have Good Policies towards Superannuation?

Especially during the election periods, many people within the industry make it one of the hot topics. There is a move that goes back to the Henrey Tax Review to try and build greater levels of equality into Australia's superannuation system.

We had seen some of that information begin to filter out in recent times, particularly with the labor government flagged a reintroduction of the pensions being accessible for higher account balances between $800,000 and potentially above. Thus, the government has flagged that there will be changes in respect to superannuation going forward to make sure that it can remain sustainable from a revenue perspective.

The Proportioning Rule

The proportioning that was introduced with retirement incomes is the biggest change, larger than the over 60 tax-free status that was added because in many instances, many experts to see the tax benefit as very significant because many clients were paying very low rates of tax due to the tax free money or deducted money they had in there but also in a way that the tax offsets would apply to them as well.

The proportioning rule allowed someone the ability to lock in that portion at a very high tax-free proportion and, in essence, grow what was previously there on deducted contributions. Let's take a look at an example:

Jake is 60 years of age and has an $800,000 account balance. He undertakes contribution strategy of $450,000. He then decides to commence an income stream where he takes the minimum pension out of it. So what we got is a tax-free proportion of 56.25%. And the obvious earning rate is 6%. As we understand, the earning rate will affect quite significantly the balances either in a positive or negative light.

What the proportion rule has done since Simpler Super was introduced. We've got a situation here where the pension which is required to be withdrawn was the greater than the earnings which the fund could generate. Conversely, in an account based pension, as long as the minimum pension was less than what the fund would outperform, you would end up in a situation where the account balance would continue to grow. What you end up here is that in a tax-free component or proportion environment, is a continued growth of that tax-free money.

By comparison, under the old rules where you had a purchase price that is not deducted, that money that the individual ticked in, were amortized over the life of the individual. So by the time someone has reached 82 or 83, the uneducated or tax-free money had been riddled away. And that's the difference.

If you want to know more about government policies on superannuation, visit our site at www.australiansuperfinder.com.au

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