SMSF contributions jumped in the June quarter, with trustees using their last non-concessional contribution (NCC) opportunity before the new limited caps kicked in, while benefit payments spiked in order to be used to implement strategies, according to the latest SuperConcepts “SMSF Investment Patterns Survey”.
The report found the level of member contributions “climbed Everest”, more than tripling from $9138 to $32,055, with 63 per cent of contributions made in the last month of the quarter.
SuperConcepts technical and strategic solutions executive manager Phil La Greca said the last time contribution levels were this high was almost 10 years ago in June 2009.
The quarterly survey also revealed the level of benefit payments almost doubled, from $27,900 to $50,313.
Of the benefit withdrawals, 89 per cent were pension payments and 11 per cent were lump sum payments, which was a reversal of the March quarter trend with 40 per cent of payments paid as lump sums.
The significant increase in benefit payments demonstrated benefits were drawn to implement both contribution and member equalisation strategies, the survey said.
Some members also withdrew part of their benefits from the super system to remain within the $1.6 million transfer balance cap.
La Greca said the large increase in benefit payments as pension payments aligned with the need for members to meet their minimum pension obligations for 2016/17.
“Benefit payment levels continued to climb as a result of the transfer balance cap, which restricts the amount a person may have in a pension phase,” he noted.
“Members implemented withdraw and re-contribution strategies including starting a new 100 per cent tax-free pension and making contributions to a spouse to try and equalise member balances and maximise access to the $1.6 million pension transfer balance for both pensions.”
The June quarter also revealed a rise in cash contributions, from 18 per cent to 19.8 per cent of total allocations, resulting in a drop in other asset classes, particularly Australian equities, falling from 36.7 per cent to 35.4 per cent.
Commenting on the next quarter’s outlook, La Greca said: “As contributions start to get invested, we anticipate a lowering of the high cash levels we saw in the second quarter.
“The $1.6 million transfer balance cap limit also means that minimum pension levels will fall, so again, less cash will be needed.”
The quarterly survey covers around 2640 funds, a sample of SMSFs administered by Multiport and the investments they held at 30 June 2017.
The assets of the funds surveyed represent about $3.1 billion.
