Treasurer Josh Frydenberg’s drive to remove superannuation as a potential electoral liability has resulted in the conflicted response that minimum drawdown concessions will now run to the end of 2023.
The policy was introduced as a short term measure two years ago as a Covid initiative aimed at giving people more access to their super to help them through lockdowns.
In contrast to other Covid concessions like granting everyone access to their super in accumulation phase, the halved pension draw downs work in favour of the industry which wants more money under management .
The early access superannuation policy was heavily used by close to four million people, who took out the maximum $20,000 in two grabs and in some cases wiped out their superannuation accounts.
Not supported by industry
This was not supported by the industry. The budget policy extension only applies to people with superannuation pension accounts and halved the amount by law you need to withdraw from the account.
The minimum withdrawals scale up to 14 per cent of your balance for those over 84 years and start at four per cent for those under 65. The only people it helped were the rich, who could live from other income sources.
This meant they could preserve more money in tax advantaged superannuation pension accounts. No figures are available on just how many people have availed themselves of the concession.
The policy runs directly contrary to stated Government policy since Mike Callaghan’s Retirement Income Report two years ago which said the Government would encourage people to spend their superannuation savings rather than simply handing it on to their beneficiaries.
The concept is the more money people have in their pocket, rather than superannuation accounts, the more they spend which is good for the economy and tax revenue.
Superannuation Minister Jane Hume has declared “there will be no increase in superannuation taxes under a coalition Government”.
Together with a renewed commitment to stick with the phased increase in compulsory super increases from 10 to 12 per cent of income, the Government has provided some welcome security to the industry.
It is also aimed at locking the door to seize on any potential uncertainty in the ALP policy as well as helping the more wealthy people who tend to support the Coalition.
What’s a little bit of inconsistency in policy aims matter when a Government’s survival is at stake.