Adviser warns on dangers of super speculation
An SMSF adviser has warned practitioners to ensure their clients do not make radical changes to or large withdrawals from their super following some of the proposed changes to the super system.
Speaking to SMSF Adviser, Hewison Private Wealth client adviser Nathan Lear said while he believes taxation changes to superannuation are “inevitable”, it is “dangerous [for superannuants] to make significant changes based on possible changes to legislation”.
Mr Lear said some of the announced changes to the age pension, as well as commentary on superannuation, have created uncertainty.
“It’s definitely getting people thinking: in the past they would have just put money into super without putting any thought into it, but with the noise it’s definitely bringing it front of mind as a consideration,” he said.
Mr Lear said it was better to work with the current set of rules, however, and with the information available at present.
“Particularly with [the recent] changes around aged care and the age pension test, it is dangerous to start withdrawing money out of super, for example, and capitalising it in the family home to generate a higher pension.”
Mr Lear said if the government were to lower or change the threshold again, it could leave the retiree with the exact same problem.
Wealthier SMSF trustees could potentially look into other structures as alternatives to super, such as family trusts, he said.
“Our advice to clients is that you’re always better to build as much of your own wealth as possible rather than relying on the age pension,” Mr Lear said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.