Personal injury win on $1.6m super pension cap

On Thursday of last week, the federal government made good on its intention to fully exclude personal injury funds from the new $1.6m cap on money that can be held in a tax-free pension account.

Amendments to the new transfer balance cap rules, which come into force from 1 July 2017, make clear that not only will the amount contributed into superannuation be excluded, but so will the growth.

This is welcome relief for plaintiffs who know that their compensation funds need to be invested to grow, if they are to have any hope of lasting the distance.

High discount rates mean that investment growth is essential.

This original drafting would have caused problems for young, severely injured plaintiffs whose investment earnings on large settlements would have been taxed.

Thanks to the Assistant Treasurer’s office for their swift action in response to input from the Australian Lawyers Alliance and the Financial Planning Association.

If you have any queries about this exemption or investing for plaintiffs more generally, please do not hesitate to contact Jane Campbell on jane.campbell@aeran.com