'Government changes announced in May as part of the response to the Henry Review will help low income earners grow their superannuation balances at almost double their previous growth rate,' said Paul Foster, Chief Executive Officer of Addwealth.

'As balances grow we believe it's more likely low income earners will seek advice on their higher balances and that financial service providers will be able to afford to service such clients. It will also help low income earners pay for life insurance to protect their families. Under the new rules, more people will have super balances that can sustain both saving for retirement and life insurance premiums. Paying for life insurance through super is a very cost effective way to obtain much needed life cover. It will be important that individuals can choose to pay advice fees from their superannuation where the advice relates to superannuation - otherwise people who need advice wont be able to access it.'

Other changes may have little real impact according to Mr Foster.

'The increase to 12% will mean very little to the majority of people over 50. By the time the 12% threshold is reached, today's 50 year olds will be 60 and only get a few years of higher concessions. This is a shame because those over 50 are the people who need to have as much super as possible over the coming 10 years to reduce the cost to our Age Pension liabilities in future years.

Commenting on the extension of the concessional cap for over 50's, Mr Foster said 'Those on under $55,000 a year have little incentive to contribute more than the current limit of $25,000. Someone earning $55,000 a year has $4,950 being contributed to superannuation by their employer and can salary sacrifice a further $20,050 bringing their taxable income down to $35,050 and a Marginal Tax Rate of 15% (the same rate as superannuation contribution tax). So contributing any more wont save the person any tax because what they save on income tax will be paid through superannuation contributions tax.'

Addwealth is a financial planning and funds management company based in Western Australia. Addwealth offers its international client base investments, insurance, tax management, property development, cash management, superannuation and estate planning. It's adviseres and support teams have significant expertise and experience in manging the tax and investment affairs for those who have achieved financial independence or are determined to do so. Addwealth's vision is to "be the world's best at creating and delivering financial services with honesty, integrity and inspiration - ALWAYS.'

Addwealth is a corporate authorised representative of Choice Future Planning Pty Ltd, and Australian Financial Services Licensee (222755).

Click here for other related articles 

---

Add this page to your favorite Social Bookmarking websites