The SMSF Association has acknowledged the latest ATO data indicates recent legislative changes to the retirement savings system, in particular those affecting contributions, have had a noticeable impact on the sector.
More specifically, the industry body recognised the ATO’s “Self-managed superannuation funds: A statistical overview 2021-22” showed amendments to the work test rule as having the most significance.
“Worth noting was that the biggest shift in member contributions was for members aged 65 to 69. Again, not surprising with the abolishment of the work test for those under the age of 67 on 1 July 2020. This was further aided by the operation of the work test exemption, allowing one-off personal contributions for eligible individuals who ceased work after reaching age 67,” SMSF Association head of technical Mary Simmons said.
“We would envisage an even more significant increase in contribution levels from the 2022/23 year onwards with the further relaxation of the work test on 1 July 2022 making it even easier for anyone up to the age of 75 to contribute to super and utilise their contributions caps.”
Other revised measures to the contribution rules that made a difference included the increase in the super guarantee from 9.5 per cent to 10 per cent, effective from 1 July 2021, the rise in the concessional contributions cap from $25,000 to $27,500 for the 2021 income year and the associated jump in the non-concessional contributions cap from $100,000 to $110,000, and the ability to carry forward unused concessional contributions cap amounts.
“In light of these changes, it is hardly surprising that 2021/22 saw the level of contributions made to SMSFs increase. SMSFs experienced a 16 per cent increase in total contributions, reaching $22 billion, with member contributions surging by 23 per cent to $16.3 billion. Employer contributions also saw a modest rise of 1.8 per cent, climbing to $5.7 billion in 2021/22,” Simmons noted.
In contrast to the contribution rule modification impacts, she pointed out the ability for SMSFs to service six members rather than the previous limit of four has had minimal effect.
“Since 1 July 2021, SMSFs have been permitted to have up to six members, but the latest ATO stats confirm that the majority of SMSFs have not taken advantage of the increased member limit. SMSFs with five or six members make up less than 0.2 per cent of SMSFs as at 30 June 2022,” she said.
Instead, she noted the ATO statistics indicated two-member funds remained the most popular structure, accounting for 68.3 per cent of SMSFs, and single-member funds represented 24.8 per cent of the total number of SMSFs as at 30 June 2022.
The regulator’s report also reflected strong year-on-year growth in the space.