Choose assets in SMSF carefully post-1 July

Australians will continue to establish SMSFs in the new world of superannuation post-1 July, however, new trustees and members have been warned to consider their assets due to the level of limitations with the changes.

According to the ATO, in June 2016, there were 1,083,425 total members of SMSFs, while the average assets per member equated to $589,636 in 2014/15.

“They continue to be a popular choice for individuals who like to plan for their retirement and we would advise you, if you are operating your own SMSF, to choose the assets within the fund wisely,” William Buck Chartered Accountants manager Charis Liew said.

“While a younger generation would normally have their super in high growth, that is, high-risk assets to increase their wealth during the accumulation stage, those close to retirement do not want to put their entire nest egg in high-growth assets.

“However, if you choose those assets strategically, they still have the opportunity to perform well and further boost your total wealth in retirement.”

Liew said over the next 12 months it would be interesting to see how super funds dealt with the breadth of the changes and how they managed them.

“We need to consider the super industry as a whole or find the right balance so that people can effectively self-fund their retirement with rules they can understand,” she said.

“When the government announced the last major changes to superannuation in 2007, they were introduced as the Simpler Super rules – it’s definitely not simple anymore and therein lies the challenge for the government.

“They are either going to have to make it simpler for people to understand and to administer their super, or we may start to see an increase over time in the number of people exiting the superannuation environment altogether due to sheer complexity or an increasing reliance on government payments to supplement their retirement, such as Centrelink or the age pension.”

She also highlighted the risk of losing confidence in the superannuation system when rules were constantly altered.

“When people lose confidence in super they are not going to start putting money aside for super and that could have much broader implications for our economy,” she noted.

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