SMSF
SMSFs hit hard by super reform

About a third (31%) of self-managed super fund members will be adversely affected by the impending superannuation reforms - not 4% the government grossly underestimated in last year's budget.

A new report from SMSF software company Class found Baby Boomers aged 49 and over will be the hardest hit as they make on average $34,100 in annual concessional contributions, which already breaches the $25,000 cap the government is imposing on 1 July 2017.

Baby Boomers and Gen X employees with SMSFs have to put the brakes on retirement savings by the new, lower cap on concessional contributions, with 25.9% aged 49 and over more likely to be affected, Class' report said.

"For a significant percentage of SMSF members, the super reforms legislated in 2016 could throw a hefty spanner into their contributions strategy and overall wealth plan," the firm said.

The report rejects the government figure that less than 1% of super account holders have a total balance of more than $1.6 million.

Class found 9.9% of SMSF members have balances more than $1.6m. An additional 1.6% of members aged under 65 have balances between $1.4 and $1.6 million and will therefore have their bring-forward contribution caps cut back under the new rules.

There will be a lot of people "nervously discussing with their accountant or financial planner" how to best structure their super and other investments to mitigate the impact of the government's changes.

"This is particularly the case for members who need to make catch-up contributions because they are older and have not enjoyed a lifetime of compulsory super or have had significant periods out of the workforce," Class said.

The latter group is disproportionately women, who on average retire with 47% less super than men, the report said.

Read more: ClassBaby Boomers
Editor's Choice
DARREN SNYDER
About three-quarters of Australian institutional investors are incorporating environmental, social and governance factors in investment decisions.
JAMIE WILLIAMSON
Businesses looking to integrate enhanced technological capability must consider its future impacts, or else risk creating a greater trust deficit in the financial services industry.
ALEX BURKE
A comprehensive review of Praemium chief executive Michael Ohanessian's termination and subsequent reinstatement determined the previous board acted inappropriately and unreasonably.
JAMIE WILLIAMSON
Advisers will soon have access to Challenger's deferred lifetime annuities through Colonial First State platforms.
Videos
Brought to you by
3 MAY 2017
Diversifying risk by investing across a wide range of income sources is often a successful formula across volatile market conditions. The Aviva Investors Multi-Strategy (AIMS) Target Income Fund focuses ...
Get it Daily
Keep up to date, don't be the last to know! Get the Financial Standard Daily Newsletter.
SUBSCRIBE
Products
Pocket investment guides featuring adviser case studies and a glossary.
Investing trends and strategies from the industry’s thought leaders.
Putting the spotlight on investment products that matter.
Expert Feed
Michelle Baltazar
FS ADVICE
A case for digital activism
The time is ripe for financial advisers to embrace their role as digital activists - fiduciaries who are early adopters of finance ...
Emma Rapaport
FS SUPER
Smashed on university fees, smashed on retirement
Since Scott Morrison's pre-budget announcement that debt would be reclassified as 'good' or 'bad', the government spending spree has ...
Christopher Page
FS PRIVATE WEALTH
The next generation
On March 20, David Rockefeller - former Chase Manhattan chair and last of Standard Oil founder John D. Rockefeller's grandchildren ...
Michelle Baltazar
FS MANAGED ACCOUNTS
Hitting the mark
Ten years from now, every financial adviser in the country will be offering their client a managed account solution. It may happen ...
Featured Profile
Professional Subscription for $295
(inc GST) for 1 year.
SUBSCRIBE
OTHER PUBLICATIONS
FS Advice
The Australian Journal of Financial Planning.
Get the free iPad app
Download the Financial Standard iPad app for FREE.
DOWNLOAD
Link to something 88IRFwWx