Business News

Time for greater super contributions

A leading accounting firm specialising in wealth management is encouraging people to contribute as much as they can to their superannuation funds amid speculation of rule changes to the industry.

“In regard to the larger contributions, the non-concessional amounts of $180,000 per year or the three-year bring-forward of $540,000, if there is potential change there, we’d like to see clients who are in a position to be able to make these large contributions in this current financial year to do so,” HLB Mann Judd wealth management partner Jonathan Philpot said.

“But it’ not always easy to raise a large sum of money and whack it into super.”

In particular, Philpot emphasised the importance of younger people who can afford to contribute more to do so.

“Clients have always been very reluctant to put too much into super at too young an age,” he explained.

He said individuals had been more focused on other financial goals in their younger years, preferring to contribute more into super around the age of 50, but in the changing retirement savings landscape that type of attitude might need to change.

“That’s what we think probably might change in the future. You’ll no longer be able to just move assets into super prior to retirement or at retirement,” he said.

“So obviously building up those super balances earlier in life, if you wish to accumulate some wealth in super, it looks as though that will probably be the way to do it.”

While he was advising people to contribute more to their superannuation funds, he was adamant borrowing to do so was not a prudent strategy.

“Borrowing money at 5 per cent and putting it into [super], perhaps if you’re nearing retirement, and if you have an investment profile of 30 per cent in fixed interest only earning 3 per cent, there’s not a huge amount of financial sense in doing something like that,” he said.

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