The SMSF Association has cautioned against the reckless use of the federal government’s measure to allow early access to superannuation benefits for individuals suffering financial adversity stemming from the coronavirus pandemic.
“We would encourage people to look for other sources of financial support before they turn to releasing their superannuation because it is effectively going to be a trade-off between current consumption against future retirement savings for future consumption,” SMSF Association chief executive John Maroney said during a webinar for members last week.
Maroney pointed out while the industry body is encouraging people to use the superannuation early access provision as a last resort, the association is not criticising the announcement.
“Given the extraordinarily difficult circumstances at the moment, we believe it’s an appropriate measure to have available and we are working with government in terms of any measure of clarifying this and trying to ensure that it is provided to those that are in genuine hardship,” he noted.
The ATO late last month issued details of the eligibility criteria for this avenue of financial relief. To this end, Maroney highlighted one of the elements that would potentially lead to a large number of inquiries aimed at advisers.
“This is a very interesting area – those since January 1 this year who have been made redundant or who have had their working hours reduced by 20 per cent or more, and if you’re a sole trader your business was suspended or there was a reduction in turnover of 20 per cent or more,” he noted.
“There are now that many businesses and hundreds and thousands of people who would fall under these categories and so we think this will be an area where there is a lot of questions [asked of] advisers and other information services about how this may operate, and we’ll be working as closely as we can with the government and regulators on how this works.”
The association met with the government last Friday and prior to the appointment Maroney said he expected this subject to be one of the topics of discussion.