Budget 2021: What advisers need to be ready for

BT head of financial literacy and advocacy Bryan Ashenden said top of the Coalition’s list to address would be the ongoing stoush around increasing the SG, with the government likely to push ahead with a rise to 10 per cent.

“At the moment indications are we will see it go up, but it’s probably an interesting question about whether there will be any announcement as to what will happen in the future,” Mr Ashenden said.

“There have been discussions about going to 10 per cent but there hasn’t been any discussion about will they freeze it at 10 or will they just let it run.”

With the transfer balance cap – introduced in 2017 as part of a raft of complex reforms to the super system – set to be indexed this year, Mr Ashenden said the government may look to simplify the current rules that would see individual super members given their own personalised indexation amount.

“The transfer balance cap will index from $1.6 million to $1.7 million and there’s been talk about the complications this creates for individuals becuase you get your personalised version of how much indexation you will or won’t get,” he said.

“The government could say let’s get rid of indexation and we keep it at $1.6 million for everybody, they could say let’s not worry about proportional indexation and it just goes to $1.7 million for everyone, or there is a version that says we do index it but you get whatever the TBC is when you had an amount assessed.”

He added that with improving women’s economic security high on the agenda for the Coalition, it was likely the budget could look at more equitable retirement savings measures across both members of a couple, including having a joint maximum super balance or facilitating easier transfer of super amounts across to a spouse’s fund.

“The fact that more women will take more time out of the work force in terms of raising children and those things, it’s unavoidable that you get that difference between men and women,” Mr Ashenden said.

“There’s been a question of are there options as to how you treat a couple – can you say build up your own balance but when we plan for retirement, we have rules that you can add the two together and have $3.2 million or $3.4 million as a cap and say it doesn’t matter whose balance it is, you can treat it as a family group.

“Or if one member of a couple has $600,000 in super so $1 million in space, can you elect to transfer your cap space across to your spouse.

“If people say that’s fine I could transfer it across but what happens if there’s a separation down the track, do you then say that super becomes an estate asset that is splittable in the event of a breakdown in the relationship, so you might give it away but it can always come back.

“All those are options as to different ways to even out account balances and make family planning easier.”