A significant and increasing percentage of SMSFs are utilising withdrawal and recontribution strategies, according to analysis of the non-concessional contributions of funds on the Class administration software platform.
The “Class 2026 Annual Benchmark Report” found in 2024/25, 19.3 per cent of funds recorded a non-concessional contribution and 43.3 per cent recorded a drawdown, up from 17 per cent and 37.5 per cent respectively two years prior.
At the member level, in 2024/2025, 14.4 per cent of members recorded a tax-free contribution and 36.4 per cent recorded drawdowns, up from 12.5 per cent and 31 per cent in 2022/23.
Noting that withdrawal and non-concessional contributions for withdrawal and recontribution strategy purposes can occur in different financial years, Class indicated the figures reflected overall activity within the cohort, rather than matched withdrawal and recontribution transactions.
The average non-concessonal contribution among members identified as using a recontribution strategy, increased from $80,440 in 2022/23 to $90,533 in 2024/2025, as the average drawdown increased from $108,256 to $189,787 respectively over the same period.
“These patterns illustrate how recontribution activity can unfold over time and alongside broader retirement drawdowns,” Class stated in the report.
The financial services organisation recognised there are a number of reasons a withdrawal and recontribution strategy may be employed and noted one of the main benefits was for estate planning and, in particular, to minimise death benefit taxes.
“This is a straightforward, quantifiable saving that advisers can model and communicate clearly to clients, making it a compelling and easy-to-justify strategy in estate planning conversations,” the report explained.
The study also found the amount of exempt current pension income (ECPI) being claimed on revenue generated from assets supporting income streams is increasing. To this end it was found the average amount of ECPI reported by SMSFs serviced on the Class administrative platform rose by 29 per cent between 2022/23 and 2024/25 and now totals $102,781.
Further the analysis revealed or 47.6 per cent of SMSFs made an ECPI claim in 2024/25, with the majority, or 27.6 per cent, claiming under the unsegregated method.
