Regulation the ‘greatest threat’ to SMSFs, says lobby group
Despite the implementation of some of the biggest changes to superannuation in 2017, an advocate group for SMSF trustees says regulatory risk still remains a significant threat to SMSFs.
Self-managed Independent Superannuation Funds Association national manager Jane McIlroy said 2017 will be remembered as the year the government introduced new rules that significantly rolled back the benefits of superannuation, including limits on the amount of tax-free savings held in superannuation and reductions with the concessional contribution caps.
“A lasting concern about the game-changing 2016 budget was that it set the precedent for future governments of either stripe to change the superannuation policy settings whenever they like,” said Ms McIlroy.
“Superannuation is not sacrosanct. From now on, any budget may contain bad news for super savers generally and especially for members of SMSFs.”
This will impact confidence, she said, as people realise that the rules under which they devote part of their income to superannuation can be changed to their detriment without warning and with retrospective effect.
“The greatest threat to the value of Australians’ retirement savings is not market risk. Invariably, markets recover over time. The greatest threat is regulatory risk,” she said.
“The actions of governments can have immediate and lasting effect. By changing the rules, they can diminish the value of retirement savings already made and they can also limit the potential to save in the future.”
Ms McIlroy predicts that the government may look to make further changes in relation to estate planning in particular, given Treasurer Scott Morrison’s comments that superannuation is not about estate planning.
“That is, if you have some super left when you die, you shouldn’t be able to leave it to your children. Is this a hint that governments might in the future somehow take possession of any super savings that are, in their judgement, surplus to requirements?” she said.
While death duties were removed decades ago, she explained, there’s still a death duty embedded in superannuation, with savings left to non-dependants taxed at 15 per cent plus the Medicare levy.
“Might this rate be changed by a twist of the policy dial in the future?” she said.
”Don’t be surprised if governments come up with new ways to sequester your retirement savings if you have saved more than they think you need in retirement and that you might still have some left over for your family when you pass on.”
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.