Speaking in an SMSF Adviser Live webcast on Monday, SMSF Association head of technical Peter Hogan said the association would be putting the proposal in its pre-budget submissions for 2020 and was hopeful of a positive reception by government, given the current focus on improving equality of retirement outcomes between men and women.
“We’ve been talking about the idea of super being a combination of assets for couples within super and what that might look like going forward,” Mr Hogan said.
“Recontribution strategy is what many couples have used to even up their super balances, but I think one of the focuses for a number of governments has been how do we bridge that gap between men and women and what they retire with.
“In the latest ATO stats, I think women still retire with about half the money in super that men do, so looking at policies to narrow that gap is something that throws up some interesting opportunities for policymakers and industry to work on over the next couple of years.”
Mr Hogan said under the SMSF Association’s proposal, couples would be able to transfer funds to each other’s accounts within the super system, rather than having to draw money out and recontribute it, or split contributions to try to equalise their super balances later in life.
“The ability to transfer money from one to the other internally within a fund might be an option. It could be a one-off opportunity, and dollar limits would usually apply to these sort of things, but it’s something we will be putting forward in our budget submissions,” he said.
BT head of financial literacy and advocacy Bryan Ashenden noted that such a proposal would go a long way to helping to equalise super balances between spouses, which was difficult to achieve now that smaller caps had been put in place.
“Some advisers will talk with their super fund members about contribution splitting opportunities, but when there are limits as to how much you can put in each year and how much you can split, that causes some issues,” Mr Ashenden said.
“It doesn’t help some people who are doing everything by the rules and they’ve got one member of a couple who’s managed to build up a substantial balance, but how do you move that [money] across when the rules really only work going forward?”
Mr Hogan said while the association would “have to wait and see” around the government’s reaction to the proposal, the SMSFA’s previous suggestion of catch-up contributions for women who took time out of the workplace had been taken up in the 2016 budget and was now law.
pointless if both are pension age, but if one spouse is not of pension age ,they should have most of the super. Other spouse of Age Pension age can get a pension until other spouse is Centrelink pension age. Easy enough to organise without the need for more legislation.
I don’t see the point for in retirement where they may be Govt pensions involved it is all jointly assessed anyway. Does it make the spouse with the lower balance feel better? If it is a committed relationship it would be a shared basis anyway no matter what the balances are. We can’t change the fact that some spouses will end up with less because of non working periods, but that in itself is a lifestyle factor and the different job prospects for each. Couples will sort it out themselves.
Good in theory, but does the proposal have any built-in safety measure to stop simply transferring funds to the older partner to gain early access. Maybe limited to transfers from larger to smaller Super Balance Account holder, and to no more than creating equal balances. The devil will be in the detail.
Yes indeed husband 4 yrs older than wife who is allowed topup to 75yo. Means she ends up with million while his stays at 500k.
They will be split in a divorce anyhow, so no harm with this
Why is it necessary to “equalise superannuation balances between spouses”? Isn’t it a shared savings pool belonging to both, and in the case of divorce it’s generally split down the middle anyway so what’s the big deal.
What if one spouse hasn’t worked for 20 years and has bugger all in super. Are they proposing an equalisation in that case too?
All pointless hot air.
Well given the TBC there is an issue with uneven balances. I had two clients that had less than 1.6M each but uneven balances and age limits meant that some had to be removed from pension phase (these clients chose to remove from super altogether).
I doubt the government would go for anyway as it is of benefit to the members and won’t increase revenue.