Daniel Mulino

The SMSF Association congratulates Dr Daniel Mulino, the newly appointed Assistant Treasurer and Minister for Financial Services.

SMSF Association CEO Peter Burgess said: “We’re looking forward to a constructive relationship with the new minister and working with him in a positive vein to address issues that are germane to our vibrant self-managed super fund community.

“On issues such as legacy pensions we achieved meaningful reform during the last Parliament, and look forward to building on the relationship established over the past three years.”

Burgess said the Association sees the adoption of sound tax policies that underpin the sustainability of our superannuation system, and implementing measures that will improve access to affordable, quality financial advice, as key policy priorities for our members.

Burgess said the SMSF sector had become a vital part of the $4.2 trillion superannuation system with more than $1 trillion in funds under management and nearly 1.2 million members.

“We are confident that the Government appreciates the importance of the SMSF sector to the economy as investors and, in many cases, as self-reliant retirees, and we look forward to working with Minister Mulino to ensure the ongoing viability of the SMSF sector.”

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Adam Spencer

The SMSF Association has confirmed its keynote speakers for the SMSF Association National Conference 2018 – Adam Spencer and Yossi Ghinsberg.

Speaking on Thursday 15th February, Adam Spencer will encourage audience members to look beyond what they know in the world of mathematics, and explore further possibilities. With his quirky comedic style, Adam will bring a light-hearted approach to the sphere of SMSFs.

Friday’s final day lunch speaker, Yossi Ghinsberg is a master storyteller with an epic story to share having been lost alone in the midst of the Amazon rainforest for three weeks. As the author of international bestseller ‘Jungle’, now a major motion picture, Ghinsberg was recently rated one of the top ten speakers in business around the world. He has developed a keynote topic designed to inspire and sow seeds of growth and positive transformation in the minds and hearts of audiences.

John Maroney, SMSF Association CEO, said “We are very pleased to have two highly acclaimed speakers addressing our annual National Conference. With two vastly different backgrounds, both Spencer & Ghinsberg are well positioned to inspire SMSF professionals to think beyond.”

Taking place on the 14-16 February 2018 at Sydney’s International Convention Centre, the conference theme focuses on SMSF professionals going ‘beyond’ – expanding their SMSF knowledge, advice and service opportunities.

Across two and a half days, over 60 expert speakers and influential sector leaders, speaking over 40 unique sessions, will present the latest technical updates on the most relevant SMSF and business topics through concurrent sessions, workshops and panel discussions.

Maroney said, “The SMSF Association National Conference 2018 is one of the most anticipated events on the calendar and will provide a platform for those working in the SMSF sector to enhance their technical knowledge and build their business networks at premium social functions.”

More information and to register for the SMSF Association National Conference 2018.

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John Maroney

The new changes to superannuation and their impact on many self-managed super fund (SMSF) trustees is creating strong demand for the SMSF Association’s Trustee Knowledge Centre website.

SMSF Association CEO John Maroney says the growing trustee traffic to the website is encouraging as it highlights their thirst for knowledge about superannuation.

“When the Association decided to invite trustees to take up membership, we strongly believed there would be keen interest in what we were offering – and this is proving to be the case with the Association demonstrating it is the pre-eminent organisation representing SMSF trustees.

“Trustees are going to the website to get up-to-date information about how best to manage their superannuation, confident in the knowledge that what we are offering is independent and factual. Having taken the decision to manage their superannuation, then it’s not surprising that they want to be as well informed as possible.

“The latest topics on the site discuss how to navigate the new superannuation environment, the SMSF yearly planner and research papers on how life events can have a significant impact in your fund.”

Maroney says many of the resources are designed to be used in partnership with a trustee’s SMSF specialist advisor, and for those trustees who don’t have an advisor there is a directory of independently endorsed SMSF specialists on the website.

Aside from the website, the SMSF Association is planning a series of educational events for trustees.

They include an event in Melbourne of 23 August that will discuss the topic, “Your self-managed super fund health”, http://trustees.smsfassociation.com/topic/upcoming-events/ while the topic for the Sydney event on 30 October will be “Your self-managed super fund in focus”. http://trustees.smsfassociation.com/topic/upcoming-events/

Other events in the pipeline include an inaugural SMSF trustee festival SMSF Week in Adelaide in 2018 that will blend education and tourism. Maroney says:

“This is a concept that works well in other countries, and I see no reason why we can’t stage such an event in Adelaide, combining stimulating sessions about superannuation with winery tours, golf days, and visits to interesting tourist attractions such as Kangaroo Island.”

The Association is also teaming up with Exhibitions and Events Australia, the nation’s largest exhibition organiser of consumer events, to host Victoria’s first Self-Managed Super Fund Expo at the Melbourne Exhibition Centre from Friday 27 to Sunday 29 April 2018.

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Andrea Slattery

The Productivity Commission’s report on superannuation policy for post-retirement importantly highlights that retirees are prudent, preferring to draw down their savings instead of relying on the age pension.

The SMSF Association CEO/Managing Director Andrea Slattery says: “This finding by the Commission confirms what the Association has always believed – give people an opportunity to build retirement savings and they will use them appropriately to fund their retirement.

“Certainly this has been an important feature in the success of the SMSF sector, where 93 per cent of retirement benefits are drawn down in the form of an income stream and not taken as a lump sum.”

Slattery says the report is another important contribution to the debate around Australia’s retirement income policy structures, providing important insights into how the system can be improved.

“But the Association is wary of some aspects of the report. The PC’s suggestion that an increased preservation age could lead to benefits of increased retirement savings balances and savings to Government revenue must be heeded with caution.

“Increasing the preservation age is a complex policy option that can impact those that are unable to work past 60 due to illness or physical issues or are retrenched late in their careers.  They may be forced to rely on social security, so sufficient flexibility should be maintained for them to access their superannuation savings when appropriate.

“Ultimately, significant changes to superannuation policy in the post-retirement phase should be considered in the context of the broader retirement income system encapsulating social security, superannuation and tax policy.

“We are pleased that the PC recognises this with their suggestion that policy changes should be considered in a broader review of retirement incomes policy,” she says.

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“The Overview confirms some very interesting macro information,” said Aaron Dunn, Managing Director of The SMSF Academy. “For example, it confirms what the industry has long suspected – that there has been steady growth in the sector, both in the number of funds and also in total super assets. Significantly, there has been a jump in the number of younger people – those in the 35-54 age group – setting up their own funds. This suggests that SMSFs have moved from being a retirement vehicle for baby boomers to a retirement vehicle of choice for people who wish to become more engaged in their superannuation savings.”

Mr Dunn said the Overview also reveals the continued growth in SMSF net flows which includes total contributions and benefit payments. “These statistics support that not only did the Simpler Super reforms provide an incentive to get money into super, but also to take money out – in the form of benefit payments – particularly for those aged over 60,” Mr Dunn said. “This could be also due, in part, to the popularity of transition to retirement strategies.”

However, Mr Dunn said that while the macro information contained in the Overview was useful, in order to better understand all the elements within the SMSF life-cycle, and to aid the SMSF industry’s response to the Stronger Super reforms, the Overview needs to also look at the statistics from a micro level.

“Disappointingly, we see no break down in the contributions, in particular member contributions, that are provided as off-market or in-specie asset transfers. This information is readily available within the SMSF Annual Return,” Mr Dunn said. “Not providing this information hampers the SMSF industry’s ability to put forward a valid argument on the Stronger Super reform recommendation to abolish the off market transfer of listed shares into SMSFs from 1 July 2012.”

Mr Dunn said that the Government has responded to a Cooper Review recommendation to ban off market transfer of listed shares predominantly on hear-say. “It would be valuable to not only look at contributions to SMSFs at a macro-level, but also understand how these contributions got into the fund – for example, as business real property or listed shares transfers.”

Mr Dunn said providing more information on benefit payments and how they are being withdrawn would also help the industry and the Government better understand the direction retirement income stream policy needs to be taken in the future.

“As longevity risk is one of the biggest issues this century, it would be good to be able to identify things such as whether, on average, members are living beyond their means and from that information estimate how long their money will last against their average life expectancy.”

Key Findings from the Overview:

• Only one in every 10 new SMSFs established are within a corporate trustee
• While growing in the area of post-retirement benefits, very few establish funds and commence income streams immediately (only 11%). 49% of funds commencing pensions within 2009, had been in existence for five or more years
• The concept of a ‘family fund’ doesn’t appear to be gaining traction… only 4% of funds have three or four members
• The entry point for SMSFs appears to be dropping. Growth has occurred in all ranges up to $500k. This may be due to performance dissatisfaction as a result of financial markets – historically the number of new SMSFs has grown in poor financial markets Conversely, there has been an asset size decline in member balances >$500k. This will have come about from a variety of reasons including the impact of GFC coupled with an increasing trend in benefit payments
• SMSF trustees appear to have taken an active response to their investment strategy as a result of the GFC, with a move to cash and term deposits. Holding of real property has also grown which would incorporate the law changes to allow limited recourse borrowing from 24 September 2007. It will be interesting to see in future data, when SMSF trustees look to make that shift back into listed equities.

The ATO Statistical Overview 2008-09 is available at the following link http://www.ato.gov.au/corporate/content.aspx?menuid=0&doc=/wp-content/00301485.htm&page=1&H1 More discussion on this topic is available now on Mr Dunn’s blog thedunnthing – www.thedunnthing.com

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SMSFs were one part of a broader review in the governance, efficiency, structure and operation of Australia’s Superannuation System.

“The Government has endorsed, without any compelling data to support its decision, and despite strong opposition from the appointed SMSF Working Group, a recommendation from the Cooper Review to remove an SMSF’s ability to receive in-specie contributions or in-specie transfers of listed shares,” said the SMSF Academy Managing Director, Aaron Dunn.

The recommendation made by the Cooper Review suggested: ‘… where an underlying market exists, all acquisitions and disposal of assets between SMSFs and related parties must be conducted through that market.’

“The outcome is disappointing given that the SMSF Working Group, along with several professional bodies, including SPAA, put forward a framework which addressed concerns raised in relation to the potential abuse of contribution caps and capital gains tax, and would allow off-market transfers to continue,” Mr Dunn said. 

Mr Dunn said a statistical summary into SMSFs had debunked many of the myths around SMSFs but the SMSF Annual Return had only recently captured in-specie transfer information.

“Unfortunately, I think the Government’s decision has been based on hear-say rather than on sound statistical evidence,” he said. “I’m still unaware of any compelling data that justified this decision.”

Mr Dunn said a more sensible approach would be to adopt a set of industry based guidelines to legislate on the issue for all superannuation funds to ensure that there is no manipulation of contribution caps or capital gains tax.

“We will continue to lobby the Government on this issue to ensure that there is an even playing field for SMSFs and listed shares,” he said.

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“Concerns have been raised around the additional financial burden that will be imposed as a result of changes to collectables held within SMSFs,” says The SMSF Academy’s managing director, Aaron Dunn.  “As part of building integrity into the SMSF sector and breaking the shackles of past stigmas, changes to the ability to hold collectables represent a positive step forward for the industry.”

The changes will prevent SMSF trustees from enjoying benefits from their investments in collectables and are designed to ensure the investments are made to derive a retirement benefit. The new rules will apply to a range of lifestyle assets including artwork, jewellery, antiques, wine, cars and recreational boats.

“While concerns about additional compliance costs are valid, they are the reality of the future of SMSFs when it comes to improving the integrity of the system,” Mr Dunn argued, “And trustees and their advisers must be mindful of the fact that it is a better outcome than that proposed by the Cooper Review, which sought a blanket ban on the acquisition of all collectables and personal use assets within SMSFs.”

Mr Dunn said changes to the sector are necessary in order to uphold strength in retirement policy.

“The Cooper Review Panel developed Ten Guiding Principles for SMSFs for a reason: specifically, to underpin the regulation of SMSFs and, more broadly, to provide guidelines for future policy-making in the SMSF sector,” he says. “Principle 7, The recognition of special risks in a SMSF environment and new levels of intervention mean that trustees, their accountants and their advisers will need to change how they operate in a new SMSF landscape.”

Mr Dunn says that the hype around collectables and personal use assets is disproportionate to the amount of money the SMSF sector currently has invested in them. “These assets represent only 0.1% of a $430 billion industry,” he says. “An area of change that will impose greater costs on a greater number of SMSFs is the proposed future prohibition of acquiring shares from related parties – and yet, to date, there has been very little public debate on the topic.

“While the industry has a right to have input in the future direction of superannuation policy within Australia, arguing the toss on collectables is really making a mountain out of a mole hill. Trustees and their advisers should be happy that they are here to stay  – albeit with tighter regulation.”

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