Superannuation Changes September 2016
Superannuation changes announced in September 2016 are more generous, with the removal of controversial limits and changes in contribution rules. Market volatility due to US interest rates and the presidential election is noted, with cautious optimism overall.
An update on the superannuation changes that have just been announced by the government in the recent budget. The government announced quite a number of changes, some of which were quite controversial. Today a number of those have been removed or changed.
The government is now intending not to introduce a lifetime limit of $500,000 of contributions after tax but instead introduce an annual limit of $100,000 a year for everybody under the 1.6 million superannuation cap.
How that cap is calculated, and when it's calculated, is yet to be specified. Specification will have to wait for legislation, we think these changes are likely to go through, as they are more generous to people in the system right now.
The offset to that is the government has removed the abolition of the work test. It was intended that people over 65 would be able to contribute to superannuation, however that will only apply as it does now for those over 65 who continue to work.
Overall we think this is probably a positive step. Once legislation is written and these changes have passed through parliament, Tuipcoffs will assess everybody's individual circumstances and make recommendations.
It's important to note these changes are effective from the 1st of July 2017 and so this year we still have the current rules which will continue to apply.
On the investment front, markets have been quite volatile over the last month, as a reaction to the potential for US interest rates to rise. US interest rates were always going to rise and the talk around it has spooked markets, but long term, we don't believe this is an issue. Interest rate rises at this stage are part of sensible management of the US economy.
Also unsettling markets is the US presidential election, and the decision that might come out of that. We are concerned about the possibility of a trump presidency, and the reactions of the markets to that outcome. It is an unpredictable time and the markets don't react well to unpredictability. For us there's no action that needs to be taken there, overall we think markets are well positioned.
There are obviously some struggles in Australia, and we remain very concerned about the unit market in Australia particularly. As well as the flow-on effects from what appears to be a significant property bubble.
At the moment the superannuation changes announced today look positive. There is time to work with them and they don't apply until the 1st of July 2017. We will look at everybody's situation, and understand what opportunities there are for each individual. Then provide advice for both this financial year and future financial years if the new legislation gets through parliament.
We continue to have a positive outlook, with some caution around the US election. If for any reason there is an economic shock as the result of the election that causes us any concern we will reach out to you. You are always welcome to reach out to us to discuss any concerns you have as well.
Highlights
The superannuation changes announced in September 2016 are viewed as more generous and positive, providing opportunities for individuals to plan their contributions effectively.
The potential impact of a Trump presidency on markets is a source of concern, emphasising the need for preparedness and risk management in investment portfolios.
The need for proactive decision-making regarding superannuation and investment plans underscores the significance of staying updated on regulatory changes and market developments.
The presence of a property bubble in Australia raises concerns about the stability of the real estate market, highlighting the importance of monitoring asset valuations and considering potential risks.
Expectations of a smooth transition in the US election outcome and minimal economic impact emphasise the importance of maintaining a balanced and diversified investment approach in uncertain times.
