Stop moving the superannuation goal posts: SMSF trustees

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Legislative change is the key risk to a comfortable retirement. That is the major finding from a comprehensive survey by Rice Warner Actuaries of members of the SMSF Professionals Association of Australia (SPAA). 

Rice Warner founder and Chief Executive Officer Michael Rice says: “The SMSF trustees surveyed identified many risks concerning them, including investment and associated risks, and keeping the value of their savings and investments in line with inflation. 

“But their biggest concern, identified by 83% of respondents, was the possible adverse impact of legislative change.” 

SPAA and Vanguard Australia engaged Rice Warner to undertake the 69-question survey to identify the financial needs of members and review their general concerns about retirement. It was undertaken by 384 SPAA members with 279 completing it in full, with the questions ranging from SMSFs and risks, to demographics, to financial advice, and retirement planning and spending. 

SPAA CEO Andrea Slattery says: “This in-depth survey confirms what we have been saying for a long time – that continual change to superannuation and the tax regime around it is undermining our universal system. What people want from Government is certainty about the rules governing their retirement savings, and this survey clearly indicates they believe they are not getting this.

“From SPAA’s perspective, this survey sends a clear message to all political parties: stop moving the superannuation goal posts to allow people to make long-term plans for their retirement.”

 Vanguard Principal (Market Strategy & Communications) Robin Bowerman agreed saying: “Trustees of SMSFs are stating loud and clear that the government’s constant tinkering of contribution rules and tax positions is beginning to seriously undermine confidence in superannuation.

“It also underscores the importance of good advice and the need for SMSF trustees to be vigilant and engaged with their super fund – which they clearly are based on the survey findings.” 

Michael Rice says the survey specifically asked whether retirement plans have been affected by reducing the contribution caps for pre-tax contributions, with 55% not only angry about the change but prepared to say why. Their reasons included: 

  • Not being able to save much until their children become financially independent. Yet when the time comes to increase contributions, the rules have changed and they cannot contribute as much as they had planned.
  • Many say they will never trust the Government again.
  • There was anger that the contribution caps do not apply to many government employees and MPs as they are members of constitutionally protected funds and they can contribute an unlimited amount.

“As a result, many respondents indicated that they will now have to contribute more when there are conflicting financial needs (e.g. cost of children’s education), while some will have to delay retirement by many years.”

Another major risk identified by the survey (68%) was the possibility of a major fall in investment markets.

“But perhaps more interestingly, only 32% say that the Global Financial Crisis (GFC) had impacted on their retirement plans, perhaps reflecting the fact that the average investment performance for the SMSF segment out-performed the average for all APRA funds for six of the seven financial years to 2011.

“We suggest that those managing an SMSF are more closely aligned to their investments than members of other funds,” Rice says.

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