By James Kirby
Geoff Wilson, the fund manager who galvanised Australian superannuation investors into a very effective lobby against the ALP’s franked dividend scheme in the last election, has staged a late entry into Saturday’s poll with a call for Labor to match the Coalition’s pledge to avoid making adverse changes to super.
Wilson has watched the ALP move to match the Coalition’s recent election initiatives such as the expansion of both the home downsizing scheme and wider access to the Commonwealth Seniors Health Card program: “They should now match the promise to leave super alone,” says Wilson.
As chairman of the $5bn Wilson Asset Management group, the veteran fund manager has penned a letter to his 120,000 shareholders – who are mostly self-managed super fund members – to raise awareness of what he sees as a continuing threat to super. Wilson has asked the Liberal, National and Labor parties to formally respond.
Wilson spells our four key areas of concern where he says the ALP has so far sidestepped making any public commitments towards preserving the current system. In contrast the ALP has explicitly ruled out changes to established tax arrangements such as negative gearing.
“Investors need to know they can depend on the super system in order to make long-term plans – we think it is time for the parties to be very clear on what they will do should they win power,” he says.
Wilson says he is asking the major parties to confirm they will not:
- Make any negative changes to superannuation carry-forward, or catch-up, contributions which are mainly used by workers who have irregular work patterns, especially working mothers.
- Alter the ability of retirees up to the age of 74 to make contributions without meeting the “work test”. According to Wilson: “This affords older Australians, including self-funded retirees, greater flexibility to contribute to their superannuation. It covers situations where they come into money later in life – eg, through inheritance”.
- Further lower the Division 293 tax threshold – this is an extra tax paid by high earners relating to super – it cuts in at salary levels of $250,000 or above, it was previously $300,000.
Wilson also wants long-term security for users of the government’s downsizing program which makes it easier to put money from the sale of a family home into super.
The program is set to be generously expanded regardless of the election outcome due to the ALP matching the Coalition’s promise to widen access to the scheme that allows up to $600,000 to be put in super outside contribution rules.
Under the expanded scheme more than one million older Australians are to be made eligible – since the age entry will be dropped to 55. The age limit was only recently reduced from 65 to 60 – that change was due to begin on July 1 this year.
The widening access to the downsizer program has been welcomed by a spectrum of stakeholders in super from pensioner groups to industry super funds such as UniSuper, where CEO Peter Chun, suggested: “This proposal removes a key barrier for people in their 50s and early 60s who are ineligible for downsizer contributions. Pre-retirees who wish to downsize as children finish education and move out of home shouldn’t be penalised.”
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