Govt urged to review TTR regime
The Federal Government has been told it should consider changing the Transition To Retirement (TTR) pension arrangements introduced by former Federal Liberal Treasurer, Peter Costello, because they unduly favour high income earners.
The call has been made by leading actuarial consultancy, Rice Warner, in a pre-Budget submission which suggests that the TTR arrangements need to be addressed, even though they were originally intended to help middle-come Australian catch up their superannuation later in their working lives.
Elsewhere in its pre-Budget submission, Rice Warner also suggests imposing a lifetime cap on non-concessional contributions of $500,000 which points out would be a considerable reduction from the current allowance of $180,000 a year.
As well, the actuarial consultancy argues for a reduction in the current level of minimum withdrawal values by 25 per cent to 50 per cent to allow members to defer drawdowns during periods of market downturns.
It said deferral of withdrawals would assist the retirement benefit to last for a longer period during retirement.
The pre-Budget submission also calls for a change to the tax rate payable on the death of a pensioner (without dependants) to be a flat 15 per cent plus Medicare giving 17 per cent in total, arguing that that this would eliminate re-contribution strategies which simply avoid tax.
The submission also suggests that, as part of a broader tax package, the Government could consider having a uniform tax rate on the earnings of accumulation and pension accounts with a rate of about 10.5 per cent providing revenue neutrality.
The submission said Rice Warner was recommending a rate of 12 per cent which would help workers to grow their benefits faster from a lower tax rate than the current 15 per cent.
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
