July is now upon us, which means the superannuation reforms announced in the 2016 federal budget have been implemented.
While plenty of people are still unhappy about the changes, most of them have had to put their heads down to get on with complying with the new regime.
The lead-up to 1 July, when the changes took effect, was a particularly trying time for all professionals servicing SMSF clients, having not only to understand all of the new laws, but also getting a handle on what effect they will have on their existing books of business.
Perhaps one of the single most predictable and frustrating things was working within what can only be described as an unreasonably tight time frame before the inception of the new rules.
Even as recently as the last week of June, the Australian Securities and Investments Commission (ASIC) issued the ASIC Corporations (Urgent Superannuation Advice) Instrument 2017/530, providing relief from having to issue statements of advice within the standard time frame dictated by the Corporations Act for urgent financial advice delivered before 30 June regarding the government’s superannuation reforms.
The only logical conclusion to draw from this development is even the regulators, and we assume other parts of the industry, are still coming to grips with what it all means and the practical difficulties involved with change in the system.
So Canberra in its wisdom has decided to inflict all of this pain on superannuants around the country seemingly without even giving it a second thought in order to raise $2 billion over the next three years in the name of repairing the budget deficit.
And the 2017 budget announcements in relation to allowing people to salary sacrifice into super to help them buy their first home and allowing people going through a downsizing exercise to contribute up to $300,000 of the proceeds from selling the family home would indicate the philosophy that the $2.3 trillion accumulated in the super system will continue to be fair game as a solution to the latest government catastrophe.
No matter how unjust these measures would appear to be on the surface, I think most people would agree if this philosophy was applied across the board, a case, albeit a weak one, could be prosecuted for it.
So it was very interesting to hear the Treasurer at a recent address to SMSF trustees and self-directed investors crowing about the government’s discipline in resisting the temptation of using the $130 billion accumulated in the Future Fund for other fiscal purposes.
According to Scott Morrison, it will mean the government will be able to meet the liability resulting from numerous defined benefit superannuation schemes, mainly the domain of public servants, without any further impost on the taxpayers of this country.
So what’s the Treasurer trying to tell us here? When there is an actual retirement savings liability to meet, then funds set aside to satisfy this obligation are not to be touched under any circumstances. However, if we’re talking about a defined contributions retirement savings pool, the government can dip into it at will because by definition there is no set liability amount to service.
Quite ironic because none of us really know how much we’ll need to fund our retirement and due to this fact our savings can be used for any purpose under the sun. It’s worrying and difficult enough for all of us to figure it out without this constant tinkering from the Canberra.
Once again it appears the government is completely out of touch with the effect these constant changes to the system are having on the average Australian, but it is quite prepared to look out for what it perceives as its own pressing interests.
It’s like the government is telling all of us “we’re all right, Jack”, but the rest of you can sort it out for yourselves.