Big scrap over the many bones of contention in the super debate

As definitions go you’d have thought they were pretty straightforward even in the complex world that is superannuation. Retrospective means “dealing with past events or situations” and to say only the richest four per cent are affected by something suggests 96% get off scot-free.

It’s only a month since the surprise super changes announced in the Budget but the row about their merit, impact and fairness gets louder and louder.

Now the claim that many more than just the super rich are hit has been joined by another bone of contention of great interest to over 50s and that’s the transition to retirement provisions.

Foreign minister Julie Bishop was caught out on radio this week unable to explain very much about the scheme apart from the obvious fact it existed.

Host Neil Mitchell, and he is backed by other commentators, claimed those on average incomes of $70,000, were hardly ‘fat cats’ and that up to 500,000 people in their fifties were vulnerable to increased taxes.

The PM later came to Ms Bishop’s defence saying super is ‘notoriously complex’, largely it should be said due to governments’ constant changing of the rules.

He explained the transition to retirement scheme would be taxed at 15 per cent, which was still a concessional rate, whereas now it’s tax-free.

The TTR allows those aged from 56 to salary sacrifice into their super fund and then get some of the money back from their account as a retirement income.

It’s all made more complicated by the headline changes to super in the Budget, which introduced a lifetime cap on the amount you can top up your super of $500,000, and are allegedly retrospective.

Among the dozen changes was also the new threshold of $1.6 million on the amount you can put into super’s zero-tax retirement phase.

 But parking the issue of what is or is not retrospective surely it’s far more straightforward to work out and be upfront about just how many people are affected by the changes.

The Coalition is sticking to its four per cent figure but more and more evidence emerges that the total might be a bit wider than that.

And while voters, as well as some politicians, might have a less than perfect understanding about the mechanics of their super they do understand the difference between four per cent and what might be a somewhat higher figure.