Analysis is beginning to filter through as to superannuant behaviour in response to the retirement savings reforms introduced on 1 July.
Naturally enough one area with a lot of interest was whether there would be any evidence individuals recognised the severity of the changes on the horizon and maximised their contributions before the tighter limits were brought in. To that end the “SuperConcepts SMSF Investment Patterns Survey” showed in the June quarter 2017 the average contribution amount from SMSF trustees tripled from $9138 to $32,055, with 63 per cent of those monies being allocated to super during the last month of the quarter.
According to SuperConcepts, it’s the highest spike in contributions since June 2009.
One thing it proves is SMSF trustees got the message in spades that they should, if they could, take advantage of the final months of the more generous contributions caps.
The situation was likened by some to the one-off $1 million contribution opportunity afforded the public by then-treasurer Peter Costello as he introduced the Simpler Super regime.
Of course back then plenty of people took advantage of this government initiative and put more money into their super fund. This, however, was done on the back of a campaign from Canberra encouraging as many people as possible to participate.
This time around there was no government encouragement to get more money into super while you can simply because it was not really the outcome Capital Hill wanted.
Yet despite this, SMSF trustees seized the day and contributed more anyway. It perhaps is an indication to Canberra that these people actually get it, so when they call for a stop to the constant system changes politicians should sit up and take notice.
In reference to this point, Revenue and Financial Services Minister Kelly O’Dwyer took the opportunity during her address to the Tax Institute National Superannuation Conference to declare all of the changes the government wanted to make regarding the tax structure around retirement savings are now complete and no additional amendments are scheduled.
I’m sure we’re all very grateful for the Minister’s declaration, but there’s only one catch. For it to ring true, the coalition would have to be voted back for another term in government and judging from the latest opinion polls this might not be a very realistic assumption.
If the present government is not returned, the alternative Labor government has already made noise about its intentions to drop the concessional contributions cap from the current level of $25,000 a year to $20,000. And that’s just for starters.
It goes to highlight the ridiculous situation of the retirement saving landscape present in this country.
At a time when the ‘new normal’, in terms of investment market behaviour with increased and prolonged periods of volatility, is still being determined, you’d think trying to maximise returns from one’s super portfolio would be the toughest challenge and most significant risk to manage.
Instead, political risk continues to be the one element most Australians, and in particular SMSF trustees, have to manage on a consistent basis.
While we may not necessarily be able to dictate what markets will do, the elected officials in Canberra certainly are in control of superannuation policy and should start indicating to the public they are prepared to do something irrefutably positive for the system.
Leaving it alone for a while would be a good start.