John Maroney was in Basel, Switzerland, working on models to help the world avoid another global financial crisis, when he decided to move back home to head up the Self Managed
Super Fund Association.
It may seem like a lateral leap for someone who has spent much of their career in the institutional space, but there is a synergy between Maroney’s last role and his current role. As the head of capital and solvency at the International Association of Insurance Supervisors, he developed global standards for capital requirements, governance and risk management, giving both investors and policymakers a semblance of control in a market-driven world. That desire for control was the driver of the post-GFC boom in SMSFs: investors were tired of having little power over how their money was managed.
Almost a decade after the crisis, the SMSF community has almost 600,000 members, who collectively hold almost $700 billion in assets. At an industry level, the SMSFA has overseen the introduction of education and professional standards that were non-existent when outgoing chief executive Andrea Slattery stepped in. Part of Maroney’s challenge will be continuing to ensure those who advise SMSFs meet the highest standards, to protect those who want to control their retirement future.
“It’s a wonderful opportunity, but also an enormous responsibility,” he says of his appointment. “There’s a lot of complexity around superannuation and SMSFs, particularly when the July 1 changes come in this year, so we see our role as more important than ever.”
Still work to be done
Maroney met with some of that complexity when he arrived back in his native Australia after more than eight years. He was greeted by rules that still prevent non-residents from keeping their money in their self-managed fund.
“I was able to leave my money in other funds, but not in an SMSF,” he says. “That’s an artificial restriction. We’re living in a global world and whenever people go overseas, they need to have the confidence their retirement savings can continue to be held in their self-managed super fund.”
Those residency restrictions are among the first items Maroney will agitate to have changed, along with the lack of flexibility around super caps and limited investment markets for smaller investors.
“We want to see infrastructure, in particular, unlocked to SMSFs,” he says. It’s something the SMSFA has been talking about for a while, but the options for infrastructure investment are still limited for smaller investors. Maroney wants to see new ideas circulated, including crowd-funding.
He also plans to continue Slattery’s crusade for flexibility in super, to better meet the work patterns and demands of trustees who genuinely want a self-funded retirement.
Slattery, who is joining Maroney in his first few weeks at various engagements with members around Australia, says she has been agitating for 14 years for greater flexibility in super.
“They need to raise the caps for over 50s, when the fiscal opportunities open up,” she says.
The current contribution levels of $25,000 a year for concessional and $100,000 a year for non-concessional, as of July 1, prove prohibitive for many who don’t want to rely on the age pension, but have the chance to get their super to a reasonable level only after they receive inheritance or sell a business.
“There’s also the opportunity of removing the work test,” Slattery says. “Fiscally, if they
can get that back [on the agenda], we think it would be a good thing.”
Ultimately though, it’s the continual changes to super that erode the faith SMSF investors need in their ability to ensure a fully self-funded retirement.
“There really needs to be stability for trustees to have confidence in the market,” Slattery says.
Maroney was pleased the most recent budget kept super changes to a minimum and approved of both the downsizing opportunity for over-65s and the first-home buyer super saver scheme.
Of the first-home scheme, he says: “We think that’s a good idea because it gives young people a chance to build something over time. It’s also an opportunity for advisers to start engaging younger people and get them thinking about super earlier.”