Non-concessional contributions (NCC) by older SMSF members have increased sharply recently, while similar contributions from younger trustees have declined, according to the latest research conducted by Class.
The Class “2024 Annual Benchmark Report”, released today, found the amount of NCCs made by trustees aged between 66 and 70 increased from $555 million in the 2022 financial year to $899 million a year later, while contributions made by those over 70 had risen from $232 million to $936 million in the same time frame.
“[There has been] a spike year on year for members over the age of 65 in the increase in non-concessional contributions. In fact, this cohort represented 50.6 per cent of all non-concessional contributions. However, non-concessional contributions for those aged 40 to 65 decreased in absolute terms by 18 per cent,” Class chief executive Tim Steele said at Class Ignite 2024 in Sydney today.
Class operations general manager Kate Anderson noted the rise in the level of NCCs made over the past year can be largely attributed to the removal of the work test in 2022.
“They don’t need to meet a work test, they don’t need to say they’ve been gainfully employed for the 40 hours and 30 consecutive days and they can put money in. That’s definitely one of the reasons why older members are making non-concessional contributions,” Anderson told selfmanagedsuper.
“The indexation of non-concessional contribution caps and the indexation of the transfer balance cap are important as well. They’re probably the three main reasons as to why that figure has increased.”
As for the drop in members in the younger cohort making non-concessional contributions, she said successive interest rate rises and inflation may have impacted the ability of trustees to make contributions.
“Interest rates have gone up, so they don’t have all that extra income they can put into super. Cost of living has also gone up and they may have used all their savings that they had saved during COVID,” she said.
“A lot of people may be giving that extra money that they would have contributed to super to their children so they can fund their rising interest rates or get a deposit for a home.”
