While AMP SMSF would not be in favour of borrowing within superannuation being prohibited, it would favour a tightening of the existing borrowing rules, said head of technical, policy and education services Peter Burgess at an AMP SMSF roundtable yesterday.
“A few years ago, we saw the treasury float some changes to the regulations to enhance the level of consumer protection around these types of arrangements and we think there’s some merit in revisiting those draft changes which were floated. They were put out for public comment but haven’t been acted on,” he said.
“It makes sense to us that you would introduce some consumer protection measures, give those measures a chance to work, and then assess whether it’s necessary to repeal those provisions.”
Mr Burgess said it would be unsurprising if the Financial System Inquiry recommended the borrowing allowances in superannuation be repealed.
“It's only a recommendation, I think we need to remember that; whether the government actually accepts that recommendation is another thing,” he added.
Mr Burgess believes there is a “question mark” around whether related-party loans should be permitted for SMSF trustees.
“Certainly I think that’s one area there can be some changes made to the law,” he said.
However, he noted that AMP SMSF does not subscribe to the view that the level of borrowing in SMSFs is “out of control.”
He also noted the retirement benefits that gearing strategies can provide to SMSF trustees.
“It does enable SMSF investors to accelerate the growth of their retirement savings and that’s particularly important for those that perhaps have not had an opportunity to save during the earlier stages of life,” Mr Burgess said.