Discussion in 'Superannuation, SMSF & Personal Insurance' started by Simon Hampel, 16th Sep, 2016.
Any noise on the reduction of the concessional annual cap from to 25k? I heard there may be a catch up provision.
$25K concessional cap is not being changed and catch up provision delayed until 1 July 2018.
Biggest opportunity now is that it looks like one can still take advantage of the 3 year bring forward rule under the old rules to make a non-concessional Contibution of $540K prior to 1 July 2017 when the new legislation commences. That is, if haven't already done so like us in the last 3 years. Under the new proposed legislation the 3 year rule stays but there's a $100K NCC annual limit so $300K for 3 year rule provided your total Super balance is less than $1.6 Mil.
It's looking strongly likely now these changes will supported by Labor and legislated.
Government cracks under pressure on super reforms - TheDunnThing
Request Rejected (Gov't media release, link works)
One thing that's not clear to me is how the $1.6m cap works with market fluctuations. I did read one suggested explanation soon after the Budget was initially released, but I've not seen much commentary/discussion since.
e.g. Someone has $1.5m in super (accumulation mode) when the $1.6m cap is brought in. Then the market tanks and their balance drops to, say, $1.2m. Can they then (assuming the NCC cap is $100kpa and the Bring Forward Rule is available to them at the time) just dump $300k into super to get back to /just under the $1.6m cap?
The explanation I read was talking about percentage of cap and restrictions along those lines....?
The experts are already looking at how best to deal with the updated changes.
I've been away on a break so haven't had a chance to really get into the new changes. So please check my following comments for accuracy.
But as I understand it once you commence a pension on 1 July 2017 that amount stays fixed. So if you commenced a pension with the maximum $1.6 Mil and the market crashes the next day reducing your balance to $1 Mil you can't top it back up to $1.6 Mil. In your above example you could only top up the initial $1.5 Mil "commencement" value with $100K regardless of what has happened to the value of your super balance since the starting date.
I'm hoping for a market crash just prior to 1 July 2017 to get as much of my existing pension into the new limited pension.
Thanks @austing, that makes sense.
I realised after I wrote that, as well, that I was conflating pension mode and accumulation mode. Obviously I needed more coffee.
It appears with the revised changes there might be opportunity to top up if one's super balance falls below $1.6 Mil. Check out my latest post. So my above post based on the first round of changes appears to be now incorrect:
Navigating the government’s revised contribution proposals
Talk about making Super more complex!
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