SMSF sector experts have had a mixed reaction to the federal government’s move to relax the work test and contributions rules for individuals in retirement.
The general opinion is the new measures are positive, with SuperConcepts SMSF technical and private wealth executive manager Graeme Colley pointing out the changes represented a better alignment of some retirement parameters in the current system.
“Raising the bar to age 66 for the work test and aligning that with the age pension system I think is a good move from a long-term perspective,” Colley told selfmanagedsuper.
“Allowing these people use of the bring-forward rule for non-concessional contributions we think is a good idea, particularly for those who have been trying to save for their retirement. To give them another two years to be able to put money into super after they might have retired we think is a good idea.”
KnowIt Group senior technical manager Rob Lavery agreed it was a positive step.
“It will open more opportunities for the trustees and it may also bring more opportunities for the clients for more contributions,” Lavery said.
Self-managed Independent Superannuation Funds Association chair Chris Balalovski was upbeat about the announcement, but questioned the effectiveness of it.
“It gives more flexibility to work in the longer run. It is an opportunity for part-time workers and volunteers,” Balalovski told selfmanagedsuper.
“However, adding two more years is not very significant. It is not going to bring any significant change in the system. Overall, it is not a significant proposition.”
Miller Super Solutions founder Tim Miller downplayed the real effect the measures would have among the demographic targeted.
“It’s a hard one to make a judgment on. It’s not going to make any change to the $1.6 million rule. So as it currently stands the real difference is some people previously had the capacity to put in maybe $100,000 and now they’ve got the capacity to put in $300,000 with the bring-forward rule and I think it’s smart to include that,” Miller said.
“But ultimately from a planning point of view, post age 65, most people have enough time to start planning prior to that and use those last years from age 63 to 65 to make those contributions.
“Given that we’ve operated in a cap environment for 10 years now, I don’t think it will address adequacy more significantly than the downsizer contributions.
“But I think it will be something that is utilised because it is often one of those things trustees ask is: ‘Why can’t we put more money in super if we’ve got it sitting outside?’”
The government on Monday announced the work test for those aged 65 and 66 wanting to make super contributions would be scrapped and the non-concessional bring-forward contributions would be made available for these individuals as well.