Noel Whittaker
Noel Whittaker

Super changes will hurt retirement plans

THE government's ongoing attack on superannuation is a disgrace. The system was about as simple as it could be when they came to power -  now a succession of changes and, worse still,  threats of changes, are creating nightmares for anybody trying to plan for their retirement.

A recent email highlights the problems caused by the uncertainty.

The reader is single and aged 50. He earns $150,000 a year and has term deposits of $180,000.  His goal is to slow down at age 55 and work part time.

He asked whether he should contribute as much as he could to superannuation, or simply focus on investing outside the system.

For starters, his options to salary sacrifice are extremely limited. His employer would be already paying $13,500 into super for him, which leaves only an additional $11,500 able to be contributed now that concessional contributions have been halved from $50,000 to $25,000 a year.

Under the existing laws he could build up his super with the aim of starting a Transition To Retirement pension at age 55, which would enable him to fulfil his dream of going part time - but that is five years away. How can he be sure that transition to retirement pensions will be available then?

Probably, he would be better off to invest his spare money in investment/insurance bonds where the fund would pay tax of 30% per annum on his behalf, while he draws a tax free income stream. Another option would be to gear into property or shares.

I guess we can take some joy in the knowledge that any changes will most likely be revealed in the Budget next month. That leaves only four months for legislation to be enacted before the election on September 12. If previous experience is any guide this is most unlikely to happen.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email:

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