The Turnbull Government’s May 2017 Budget is tipped to include superannuation incentives for retirees as part of its strategy to address housing affordability. The Government is reportedly considering a proposal to give retirees who sell their family home and move to a smaller property an exemption from the $1.6m cap on super balances and the annual $100,000 limit on non-concessional contributions. From The AFR:
The amount of super people have does affect their eligibility for an age pension. Under the budget proposal, if an age pensioner wants to downsize and top up their super, they could do so but lose some or all of their pension.
Those to be targeted by the government policy are pretty much self-funded retirees who don’t receive a pension and would be encouraged to sell their home by being able to bolster their retirement income.
This is a massive policy improvement from the proposal flagged in March, which would have seem retiree downsizers excluded from both superannuation caps and the assets test for the Aged Pension.
At least under this policy, those that downsize and take advantage of the super exemptions would lose access to the Aged Pension as their superannuation balances exceed the new asset test threshold:
In turn, the financial damage to the Budget would be minimised.
