Don Hamson

Plato Investment Management, a Sydney-based asset management firm with over $10 billion in assets under management and a strong focus on retirement income, says the Labor Government’s $3 billion super cap must be indexed.

“This is an enormous flaw in the current proposal. It is perplexing the Treasurer has indicated this cap will not be indexed over time,” said Dr Don Hamson, Managing Director of Plato Investment Management.

“Currently the move is expected to impact 80,000 people, or just 0.5% of super accounts with balances of over $3 million in today’s money, however we have inflation currently running at 7.8% which will erode the real value of the $3 million cap over time.

“This means a lot more than 0.5% of superannuation balances will eventually be taxed at 30%.

Dr Hamson is calling for forecasts on how many people will be impacted by this change in the future.

“How many people in the superannuation system today will be impacted by this cap at some time in their superannuation journey?

“You only need to do some basic math – if inflation ran at 4% per annum for the next 30 years, and remember inflation is currently 7.8%, a $3m cap would be equivalent to just $925,000 in today’s dollars.

“Inflation will mean that many, many more individuals will be hit by this cap in the future if it is not indexed to inflation. I think voters need to know how many people will be impacted in say 30 years’ time, not just how many are impacted now.

“The other big question for the majority of retirees and even those nearing retirement is – what other changes is this Government likely to make next?”

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