Ordinary Australians could lose tens of thousands of dollars or more from their superannuation pay-out when a little-known new law takes effect on July 1 2017, a visiting fellow at QUT Law School has found.
Alastair MacAdam said the confusion around some of the changes to superannuation law had obscured a provision that would cancel anti-detriment benefits offered by many superannuation funds.
“We’ve been told that the Federal Government’s superannuation changes will affect only 4 per cent of people,” Mr MacAdam said.
“But removal of the superannuation anti-detriment benefit will affect many ordinary people who have a spouse or dependent children, even people on modest government schemes could lose $100,000 or more. It applies to everyone.
“According to the ATO website the anti-detriment payment is paid to an eligible spouse when a superannuation member dies before the spouse or dependent children die.
“It is an additional payment made up of the 15 per cent tax the deceased person has paid over the life time of their super fund.
“In other words, it is a ‘refund’ of all the contribution tax which goes to the dependant spouse and/or children on top of the balance of the super fund.
“For many people with modest superannuation balances this could be anything from $10,000, to $30,000 extra super that their dependents will miss out on after July 2017.”
Mr MacAdam said the removal of the anti-detriment benefit was particularly unfair because there was no grandfathering clause to protect the existing rights of members of superannuation funds.
“The anti-detriment payment was initially instigated as a top-up for widows and children.”
Mr MacAdam said the removal of this payment had largely gone unnoticed by finance commentators.
“In cases where the anti-detriment benefit is a substantial amount of money, people might have been banking on it as part of the benefit to provide for their spouse and children, particularly if the partner had withdrawn from paid work to care for children and family members.
“This was a legislated benefit that has been taken away from us.”
Media contact: Niki Widdowson, QUT Media, 07 3138 2999 or n.widdowson@qut.edu.au
After hours: Rose Trapnell, 0407 585 901 or media@qut.edu.au.
