The SMSF Association has reiterated its opposition to the potential imposition of a superannuation balance cap a few days after Assistant Treasurer and Financial Services Minister Stephen Jones expressed concerns about a number of self-managed funds with asset holdings of over $100 million.
“We do not and have never supported a cap on superannuation balances. The small number of SMSFs with extremely large balances are a legacy issue that the 2017 changes, which placed clear limits on contributions to superannuation funds and the amounts that can be held in the tax-free retirement phase, will remedy over time,” SMSF Association chief executive John Maroney said in the body’s daily newsletter to members.
“It’s also our position that if there is a decision to restrict the retention of extremely large balances in superannuation, then [that] needs to be handled carefully to ensure that any rule changes allow adequate time to manage the restructuring that would be involved, especially where large illiquid assets are involved. It also must not adversely affect the vast majority of SMSFs with moderate balances.
“We did suggest in 2020 that the Retirement Income Review examine the issue of extremely large balances, but deliberately did not recommend where that line should be drawn.”
Maroney pointed out any move to implement a limit on superannuation balances would constitute a broken promise by the Labor government as Treasurer Jim Chalmers stated before the May election the ALP would not introduce any new superannuation taxes or a balance cap should it be voted into power.
“But if the government has decided to have this conversation about balance caps, then it is one the association and its members will actively participate in,” he confirmed.
The industry body expressed its support for the government’s intention to legislate an objective for superannuation before any changes would be made to the retirement savings system, such as any amendment to the tax concessions suggested by Jones at the AFR Super & Wealth Summit 2022 earlier in the week.
“The association has long supported the recommendation by the Financial System Inquiry to have an agreed common objective for superannuation, believing that if this foundation stone is put in place, then it will allow a far more productive conversation about the entire system, including balances,” Maroney said.
“What must always be remembered is that constant changes to the superannuation tax settings erode confidence in the system and discourage members from making long-term savings plans.”
