Average contributions to self-managed superannuation funds (SMSFs) have more than doubled, as trustees take advantage of legislation giving more access to tax breaks for personal contributions coming into effect from July 2017.
The finding came from a SuperConcepts survey of 2,600 SMSFs, which showed that the average quarterly contribution went from $3,498 to $8,623 from before the policy came into force to 30 June 2018.
“This was a positive rule change that SMSF trustees have embraced with gusto because it was only ever available to the self-employed,” SuperConcepts executive manager of SMSF technical and strategic services, Phil LaGreca, said.
He said that the heavy utilisation of the rule showed the value of specialist SMSF advice, as “making a rule is one thing but getting people to know it, understand it and use it is where the professional advice market has really demonstrated strong value”.
The survey also found that the average benefit payment for the June 2018 quarter showed an increase compared to the prior quarter, but a large decrease to $22,289 from $50,313 for the June 2017 quarter.
“This again reflects the significant impact of the legislative changes that applied from 1 July 2017 where the capital value of pension accounts is limited to $1.6 million which resulted in a lower level of pension payments being required to be paid,” LaGreca said.
“Nevertheless, some clients still required the same level of cash from their SMSFs so that meant rather than deplete pension accounts by drawing additional payments above the statutory minimum level, they elected to take those amounts out as lump sum payments out of their accumulation accounts.”
Of all benefit payments, 79 per cent of withdrawals were pension payments and 21 per cent were lump sum payments.