Contributions skyrocket as reform panic sets in
The average contribution made by SMSFs in the last quarter almost tripled from the previous quarter, with further increases expected in the next few months.
The SuperConcepts SMSF Investment Patterns Survey for December 2016, based on some 2,800 funds, showed that the average contribution inflow for the quarter increased from $3,040 to $8,550.
The rise in contributions is not surprising, according to SuperConcepts executive manager of technical and strategic solutions Philip La Greca, given the fact that trustees have to make large non-concessional contributions before 30 June 2017.
“The current non-concessional amounts apply for the remainder of this financial year and investors are taking advantage of the limited time available to them. We expect a continued uplift in the level of non-concessional contributions in the lead-up to July 1,” Mr La Greca said.
The average benefit made by SMSFs also increased, jumping from $13,220 in the September quarter to $16,260 in the December 2016 quarter.
SuperConcepts said the increase could be the result of members trying to reduce their pension balances following the introduction of new Centrelink asset test rules that apply from 1 January 2017.
“In addition, this can also be the result of trustees implementing withdraw and re-contribution strategies to take advantage of the current contribution caps,” the company said.
The higher contribution levels also saw an increase in the proportion of cash assets in SMSFs, with the average allocation to cash rising from 18.1 per cent in the September quarter to 18.4 per cent in the December quarter, Mr La Greca 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.