The flexibility and control associated with SMSFs mean they continue to be the most effective superannuation vehicle even in light of the changes to the industry handed down in the 2016 federal budget, according to the SMSF Association.
“The fact remains SMSFs continue to be an excellent avenue for people to take control of their retirement savings, despite some of the detrimental changes to superannuation in the budget,” SMSF Association chief executive Andrea Slattery said.
“It is very important to understand that superannuation is the best vehicle for Australians to save.
“It is also important not to forget that SMSFs offer significant flexibility and control that is even more relevant and useful in light of the budget changes.”
Slattery identified two specific new rules included in the budget SMSF members would be able to adapt to more easily due to the flexibility of those types of retirement savings vehicles.
“Many SMSFs have husband and wife as members. This allows for more effective strategies to split contributions and savings between the fund’s members when addressing issues arising from the new budget measures, such as the $1.6 million cap on tax-free retirement assets and the $500,000 limit on non-concessional contributions,” she explained.
While industry commentary has predominantly focused on some of the negative superannuation items contained in the budget, Slattery emphasised there were some positive elements to acknowledge as well.
These included the ability of individuals to carry forward unused concessional contribution amounts, the ability of people aged between 65 and 74 to make super contributions without having to satisfy the ‘work test’, the ability for people to make super contributions on behalf of their spouse who is under 75 years of age without having to satisfy the ‘work test’, and the ability for SMSF members to make deductible personal contributions from 1 July 2016.
Slattery also took the opportunity to point out the budget changes highlighted the importance of getting specialised SMSF advice.
“What’s critical in this new complex environment for SMSF trustees is the necessity to seek out specialist SMSF advice to ensure they put the right strategies in place to secure their retirement future,” she said.
“There can be no argument that the budget has moved the superannuation goal posts, and trustees need to respond accordingly.”