Colonial First State data reveals financial adviser hot topics

CFS’ team of technical superannuation experts is helping ensure advisers are ready to help members, for whom early access under the Government’s package will provide much needed funds to help cover many of life’s essential costs.

Data from enquires made by financial advisers to Colonial First State (CFS) during March and April showed a high level of interest following the Federal Government’s introduction of a number of measures to help Australians experiencing financial hardship as a result of the coronavirus.

The wide range of measures include providing additional social security support to people and making it easier to access, offering support to employers to help them keep more Australians in employment as well as allowing retirees to preserve capital by reducing the minimum drawdown requirements for account based pensions and term allocated pensions.

The Government’s early access to super measure also allows eligible people to access up to $10,000 of their superannuation in 2019–20 and a further $10,000 in 2020–21.

CFS’ team of technical superannuation experts have been helping advisers understand the latest regulation and law changes, so they in turn, can best help their clients.

The main questions being asked by financial advisors regarding the government’s new measures included:

• Understanding the expanded eligibility rules for the JobSeeker payment and entitlement to the coronavirus supplement
• Which employers will qualify for the JobKeeper payment and what that means for their employees
• How the reduction in the account based pension minimums will apply for the remainder of 2019-20 and in 20220-21
• In what situations members will qualify for early access to their super and where they won’t.

CFS Technical Services Manager Craig Day said the technical support team has a unique insight into hot topics, based on the questions advisers receive from their clients.

“The focus from advisers to date has been on understanding how the different rules may benefit their clients to help them make important financial decisions during these difficult times.

“For many Australians this is the first time they may have interacted with the social security system or been able to withdraw money from superannuation.

“We’ve received a number of questions on how members can register their intention to claim social security benefits so they can qualify for the one or both $750 Economic Support Payments, or the $550 per fortnight coronavirus supplement. We’ve also had a lot of questions looking on how the partner income affects the applicant’s social security payment rates.”

Mr Day continued, “Since the first economic stimulus package on 12 March, the government has been making significant additional announcements as well as updating and providing further clarification on past ones.

“Getting on top of all these announcements and understanding what they mean for different people in different situations has been incredibly important.”

Commenting on the Government’s early access to super measure Mr Day said, “For those who are considering withdrawing their super under the new early release rules it’s really important to make sure you have enough funds in your super account. Depending on a fund’s reporting, the MyGov website will provide individuals with their account balance as at 30 June 2019. Given the level of volatility in asset values this means there is a chance MyGov could overstate the member’s actual account balance by a significant amount at the time of application.

“This matters because if a member has insufficient money in their fund they would then be unable to make a second application to withdraw the balance from another fund with a higher value in the same year, as you are only limited to one application per year.

Mr Day also said it was important that people are fully informed about the policy and consider the potential impacts on their super before they decide to access it.

“There could be some unintended consequences for some members. For example, fully withdrawing a small balance could result in the inadvertent cancellation of a member’s salary continuance, life and total and permanent disability insurance”.

CFS members with questions should speak to their financial adviser or check out the Centrelink website for details on JobSeeker or the ATO website for information on JobKeeper and early access to super