The recent federal budget has brought the topic of superannuation to the fore, bucking the trend for maintaining the relative status quo in superannuation legislation.
The proposed changes to superannuation have given due cause for the SMSF sector to stand up and question the rationale behind them.
The SMSF Members Association, the voice of SMSF trustees in Australia, has come out on the front foot to represent the views of its members.
A recent survey of members has provided the ammunition to take feedback to the policymakers and give them a better insight into the true impact of the proposed changes at ground level. The barrage of responses showed the members are not happy.
The proposed reductions in yearly concessional contributions from $35,000 to $25,000 raised the hackles of many members, but the retrospectivity of the proposed changes presents an undertone of unfairness. Superannuation is a necessary component of the Australian economy, which previous governments have acknowledged by developing policies that encourage use of the scheme. Policymakers have taken a conservative approach towards superannuation until now.
A common thread of thought in the SMSF Members Association survey centred on a change of heart towards superannuation by the government.
One member summed up the sentiment towards the changes by saying: “My wife and I saved for our retirement through our SMSF using super policy put in place by Howard and Costello. We are retired and our super is in pension phase. We are conservative investors so as not to risk our retirement nest egg, which we can no longer add to at this stage of our life. I have voted Liberal all my life and now feel betrayed by these retrospective changes. The Howard government gave us an incentive to save and fund your own retirement and the Turnbull government just took it away. Why would anyone bother with super when in the stroke of a pen it can be retrospectively changed.”
Since conducting the survey, the association has conducted a series of seminars, which further gave members an opportunity to air their concerns and the sentiments of the survey flowed.
In a nutshell, SMSF members can be summed up as being confused and we can’t blame them. For over a decade the policies towards superannuation have been encouraging. The government put in measures to entice people to invest in their retirement in the form of superannuation. The more than 1 million SMSFs in Australia followed suit to help bring the goals of the government to life. Now those same people are being told by the government: “We need some of that money back we told you to put away, and by the way, we need to go back to 2007 to grab some of what you had.”
The association finds it a difficult pill to swallow when our members have planned their retirement based on encouraging government superannuation practices and now the government is working to undermine the essence of what superannuation is all about.
Our members represent a large proportion of the Australian economy and have worked hard to be able to live independently of government handouts in their retirement. Such members of our society who are not looking to be a financial burden on our government in their retirement should be encouraged for our country’s greater good. The association will continue to lobby the government on behalf of its members as we feel these proposed laws are a blight on the superannuation system in this country and our economy.
The proposed policy changes raise the question: where to for superannuation? Is this the start of a paradigm shift? What role does super play in the economy? Does the government want people to invest in their superannuation a little or a lot?
We acknowledge the government has the right to change the superannuation system, but when you take away all the hype and focus on what superannuation is all about, it is not only about funding retirement.
Superannuation is a pathway to help all Australians in their retirement, not just the SMSF sector. Strong investment in superannuation not only reduces the reliance on government pensions, but can create more wealth for the government to deploy across society to improve living standards. Isn’t the whole purpose of government to improve the living standards of its people? We think so, but the latest policy changes don’t reflect that same thought.
The association is lobbying policymakers to ensure the voice of SMSF trustees is heard. Only time will tell whether the message has been heard, but no matter what, the association will be there to support its members to help them achieve their goals of living the lifestyle they have chosen to pursue through their SMSF investments.
