Super opportunity flying under the radar
Clients had one final opportunity to ramp up superannuation balances following the scrapping of the retrospective lifetime non-concessional contributions cap of $500,000 and the maintaining of the current cap of $180,000 until 30 June 2017, but this was flying under the radar.
Such was the advice from HLB Mann Judd head of wealth management, Michael Hutton, who told a media lunch this week the approach to the superannuation reform this year differed from the changes made to super in 2007 under former Prime Minister, John Howard and former Treasurer, Peter Costello.
When clients were allowed to transfer up to $1 million into their super accounts before 30 June, 2007, after which an annual maximum of $150,000 of after-tax contributions could be made, $22.4 billion was transferred to super accounts in the June quarter of 2007, and was the first time that member contributions exceeded employer contributions.
Hutton noted that while the firm was engaging in discussions with clients about this opportunity and that clients thrive on deadlines, the opportunity had not been digested as yet and he had not seen members pour cash into their super unlike 2007.
"I'm not sure it's really been digested as a big opportunity whereas $1 million back in 2007, people really got on board with that and it became quite a topic of conversation at dinner parties," Hutton said.
"Maybe the last two weeks of June [2017] we'll see it. I think the investment platforms and that sort of thing, the month of June in 2007 saw massive amounts of money under their platforms."
Hutton also said government changes in recent years meant it was becoming increasingly difficult to top up super in the last 10 years before retirement, which meant people needed to contribute smaller sums more often early in their work life.
"While we used to talk to clients about focusing on superannuation when they were in their fifties, we are now having these conversations when clients are in their thirties," he said.
From 1 July 2017, the Government will introduce an annual non-concessional contributions cap of $100,000, or $300,000 brought forward over three years, down from $180,000 or $540,000 brought forward over three years.
Recommended for you
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
Treasurer Jim Chalmers has opened a consultation into the design of the annual superannuation performance test, canvassing views on a range of reform options.
