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ATO stats reflect TBC impact

ATO statistics transfer cap

The introduction of the transfer balance cap has had a significant impact on SMSF member behaviour as indicated by the latest ATO sector statistics, a technical expert has said.

The latest ATO statistics regarding the SMSF sector have revealed the significant effect the introduction of the transfer balance cap has had, a technical expert has said.

SuperGuardian education manager Tim Miller said the ATO’s “Self-managed super funds: A statistical overview 2017-18” report was the first time the figures have been published since the transfer balance cap was introduced and highlighted the table showing the distribution of total SMSF benefit payments by type as proof of the effect the legislation was having.

In that table the data shows SMSF members receiving benefit payments in the form of a lump sum jumped from 13.7 per cent in 2016/17 to 29.7 per cent in 2017/18.

“That to me signifies a number of things. One, it signifies that a lot of people from 1 July 2017 had to transfer benefits back to accumulation from their pensions that were in excess of $1.6 million, so there’s a trigger point there,” Miller said during the SuperGuardian technical webinar held yesterday.

“[It also indicates] people are looking at these particular strategies about commuting benefits and taking lump sums rather than pensions.”

According to Miller, other information contained in the same table, showing a reduction in benefit payments received from income streams dropping from 78 per cent in 2016/17 to 65.8 per cent in 2017/18, further reinforced this point.

“So even though the total benefits were fairly similar from previous years, there’s an obvious reduction in how much people have taken from an income stream,” he said.

“[It means] people are looking closely at their minimum [pensions] and taking that and [then] potentially taking their other benefits as lump sum withdrawals.”

During the same session, he suggested advisers had to take into account all applicable strategies, including those in the medium to long term, when helping clients decide how to draw down benefits above minimum pension.

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