The Australian public are now left facing further uncertainty over this term of government, and it is becoming even more unlikely that previously announced government legislation will ever see the light of day in its publicised form.

So where does that leave Australians who are planning for retirement?

Superannuation remains, and will continue to remain, an attractive structure to hold assets for retirement income.  Irrespective of which party is making the rules, the government of the day knows it requires the majority of Australians to prepare for their own retirement.  This means that many of the tax advantages of superannuation are likely to be around for the longer term.

For those who are early in their career, need to understand how important it is to start contributing to superannuation as it may not be possible to “catch up” later on in life – particularly if there are more draconian caps put on the level of superannuation contributions.  Your contributions should be based on the long term superannuation balance you wish to accumulate over your working life.

For those nearing retirement, managing your contribution caps is increasingly important.  If you have a spouse with a lower superannuation balance, it is worth trying to build up their balance as well.  That way, as a couple you get to make the most of superannuation, should the proposed $1.6 million cap on tax free pension benefits get through.

For those already in retirement, there is not much more you can do other than keeping a close eye on future changes to ensure that you do not end up worse off.  For those with a pension balance slightly over the proposed $1.6 million cap, one strategy may be to withdraw the excess and hold those assets in your personal name.  This would allow you to make use of the $18,200 individual tax free threshold, and still receive some benefit from the tax free pension up to $1.6 million.

Overall, planning for retirement is a lifelong quest, and should be focussed on the wonder of compounding returns rather than any particular tax arrangements of the day. 

Superannuation strategies are complex in a world where legislation can change from year to year.  We recommend you seek professional advice from a qualified adviser prior to making any changes to your strategies.