The changes to superannuation in the federal Budget highlight why self-managed super funds (SMSFs) still provide the best option for people who want to be self-sufficient in retirement.
SMSF Association Managing Director/CEO Andrea Slattery says: “The fact remains SMSFs continue to be an excellent avenue for people to take control of their retirement savings, despite some of the detrimental changes to superannuation in the Budget.
“It is very important to understand that superannuation is the best vehicle for Australians to save. It is also important not to forget that SMSFs offer significant flexibility and control that is even more relevant and useful in light of the Budget changes.”
She says some of the positive changes to superannuation in the Budget were measures the SMSF Association has been advocating for years.
“The carry forward of unused concessional caps will greatly assist women and those with broken work patterns. The ability to continue to contribute after you are 65, even if you have stopped working, will allow people to keep building their retirement savings.”
Slattery says SMSF members have more choice and control on how their retirement savings are invested and how they drawdown these savings in retirement, allowing trustees to adapt to the changes to the superannuation laws.
“Many SMSFs have husband and wife as members. This allows for more effective strategies to split contributions and savings between the fund’s members when addressing issues arising from the new Budget measures such as the $1.6 million cap on tax-free retirement assets and the $500,000 limit on non-concessional contributions.
“What’s critical in this new complex environment for SMSF trustees is the necessity to seek out specialist SMSF advice to ensure they put the right strategies in place to secure their retirement future.
“There can be no argument that the Budget has moved the superannuation goal posts, and trustees need to respond accordingly.”
Slattery says amid all the controversy emanating from the Budget, it is important to remember there were some positives for SMSF trustees:
• Carry forward of unused concessional contribution caps;
• Members aged 65 to 74 can contribute without meeting the “work test”
• Ability to contribute on your spouse’s behalf (who is aged under 75) without them having to pass the work test; and
• All members being able to make deductible personal contributions to their SMSF from 1 July 2016.
