The superannuation advice landscape is changing like never before. Treasurer Scott Morrison’s 2016 federal budget introduced what were the most significant reforms to superannuation in a decade. The resultant scramble to legislate over 150 pages (and counting) of new laws and regulations before 30 June 2017 has been a huge undertaking for the government.
In this year’s budget, Morrison proposed additional changes to superannuation. The measures included one-off contributions when downsizing the family home and intertwining the limited recourse borrowing rules with the $1.6 million total super balance cap. These changes only add to the growing layers of complexity facing the superannuation industry.
Superannuation professionals are viewing the lead-up to 1 July 2017 as the beginning of what will be a very different and challenging time, in particular for those advising SMSF trustees.
The timing of these major superannuation reforms collides with the introduction from 1 July 2016 of the requirement for an individual to hold an Australian financial services licence to provide superannuation advice – otherwise known as the removal of the accountants’ exemption. Prior to 1 July 2016, accountants were allowed to provide advice in relation to the “establishment, operation, structuring, or valuation” of an SMSF.
It appears the government has been ill-advised in its lack of consideration of the practical ramifications of these two rather significant changes to the superannuation advisory environment overlapping, especially at a time where there is growing pressure for accountants, many who may be new to the financial advice process, to comply with all the new rules. In combination, these ‘tweaks’ have disrupted the superannuation advisory sector.
Before they come into effect on 1 July 2017, there still remains an overwhelming amount of information for many superannuation fund members to consider, plan and change prior to 30 June. There’s maximising contributions using the current higher caps, the terms of their existing (or future) pensions, the impact on their estate plan and compliance with the $1.6 million transfer balance cap, just to name a few. It’s fair to say the
Simpler Super rules of 2007 have well and truly been thrown out the window. Many accountants and advisers in this sector have openly voiced their frustration and confusion about how best to deal with all these changes in the allotted time frame. To simply understand when not to cross the line, or to even work out where the line is actually drawn, is a feat in and of itself.
Our industry faces some challenging times ahead beyond 30 June as we adjust to the new world of advising on superannuation. In reality, the sheer volume of compliance work alone is enough to deter some practitioners from giving superannuation advice at all.
Where the appropriate limited licence may be held, accountants are bound to face clients who are not accustomed to having to pay a one-off cost for written personal superannuation advice.
Despite the government drawing what it believes is a clear line in the sand on the provision of superannuation advice, it has a longer-term impact on the actual role of the superannuation adviser. As more changes come down the line, they continue to make it increasingly challenging for accountants to practice in this industry, given the complexity and specialisation required to provide sound holistic superannuation advice.
We need to keep the provision of superannuation advice simple and accessible for everybody.