Federal Budget 2012

09/05/2012
Provided by Mercer. The information in this article does not necessarily reflect the views of the Trustee.

Superannuation remains attractive but Mercer urges high income earners and employers to seek professional advice

Mercer's Managing Director, Australia & New Zealand, David Anderson, said continual changes to superannuation will unfortunately create a wave of uncertainty, confirming the commonly held view that superannuation is an irresistible honey pot.

"There is a risk that further complicating and continually changing the rules in superannuation will reduce investor confidence in super and that would be a most unfortunate outcome," Mr Anderson said.

"If Australia's high income earners are not encouraged to engage in the superannuation system, this may have a flow-on effect to middle income earners who would be influenced by the actions of their higher earning peers and therefore, align their investment strategies away from superannuation.

"Despite the changes announced in the Federal Budget, superannuation remains attractive for all Australians. It is a very effective strategy for building wealth," he added.

"Even with a doubling of the rate of contributions tax for the highest income earners, the rate is still 16.5% less than the personal tax rate which would be applicable to assessable income. Further, the tax rate on your super investment income remains at a low 15%," Mr Anderson said.

Importantly, high income earners will need to manage their remuneration packages carefully, noting the effects of the removal of the private health insurance rebate, the additional contributions tax, and the concessional contributions cap. All these changes come into effect from 1 July 2012.

"Professional financial advice becomes an imperative for high income earners and anyone approaching retirement noting the deferral of the additional $25,000 concessional contribution amount," Mr Anderson said.

Employers should also review their remuneration policies and practices. Changes to ETPs, concessional caps and new rules for temporary international executives means that employers will need help in structuring and designing appropriate packages.

 This information has been prepared by Mercer Outsourcing (Australia) Pty Ltd (MOAPL) ABN 83 068 908 912, Australian Financial Services Licence #411980. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek professional advice from a licensed, or appropriately authorised, financial adviser if you are unsure of what action to take. "MERCER" is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2012 Mercer LLC. All rights reserved.
 

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