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Super changes from 1 July 2022
The Treasury Laws Amendment (Enhancing Superannuation Outcomes) Regulations 2022 are now law.
These amendments reduce the eligibility age for downsizer contributions into super from 65 years to 60. They also repeal the work test for non-concessional and salary sacrificed contributions for those aged from 67 up to and including 74 years. They will come into effect from 1 July 2022.
Also, from 1 July 2022, the maximum amount that can be contributed into super, and accessed for a first home under the first home super saver (FHSS) scheme, will increase from $30,000 to $50,000. The maximum contributions each financial year that can count towards your FHSS maximum releasable amount remains at $15,000.
To be eligible for the scheme you still need to be buying your first home and will occupy, or intend to as soon as possible, the premises. You must also intend to occupy the property for at least six months within the first 12 months you own it, after it is practical to move in.
SMSF numbers and assets continue to rise
In the five years to 30 June 2021, the number of SMSFs grew by 6% to 598,000 and SMSF assets grew by 24% to $822 billion, according to the Australian Taxation Office’s (ATO) latest annual statistical overview of self-managed super funds.
The overview includes statistics on SMSF annual returns for the 2019–2020 financial year and some data for the 2020-2021 financial year.
On average, SMSFs had assets of over $1.3 million in 2019–20, the same as the previous year and up 20% over five years. Just under half (48%)- had assets between $200,001 and $1 million.
The top five assets held by SMSFs at 30 June 2020 (by value) were listed shares at 26%, cash and term deposits at 21%, unlisted trusts at 12%, non-residential real property at 10%, and limited recourse borrowing arrangements at 7%.
Interestingly, the average member balance for women rose by 23% over the five years to 2019–20, while the average balance for men increased by 19% over the same period.
Of all SMSFs, 55% were in accumulation phase at 30 June 2020, a decrease of 3%, while 35% were in retirement, an increase of 3 per cent, with the remainder in partial retirement.
Super merger news
The merger of QSuper and Sunsuper into the Australian Retirement Trust – the second largest super fund in the country – was finalised late February. The new fund has over two million members and more than $230 billion in funds under management.
The newly former Australian Retirement Trust also intends to reduce its fixed weekly administration fee for Australian Retirement Trust Super Savings account members from $1.50 to $1.20 from 1 July 2022 and from 0.16% to 0.15% per year for Australian Retirement Trust QSuper account members, subject to final approval by the Australian Retirement Trust Board.
“As the second largest super fund in the industry, we’ll leverage our size and scale to seek out world-class investment opportunities for our members and deliver enhanced products and services and lower fees,” Australian Retirement Trust chief executive officer, Bernard Reilly, said.
The $8 billion Australia Post Superannuation Scheme (APSS) has also announced that it has agreed to merge with the Australian Retirement Trust.
“Three years ago, the APSS initiated a review of the best ways to serve the long-term financial interests of our members and we are delighted that this competitive process sees us choosing to make a successor fund transfer into Australian Retirement Trust,” APSS Trustee’s Independent Chairman, Mark Birrell, said.
The announcement follows Maritime Super undertaking a competitive assessment of potential merger partners and is a continuation of an existing relationship with Hostplus. In April 2021 Maritime Super entered into a strategic outsourcing arrangement with Hostplus when it moved the management of its investment assets to Hostplus’ Pooled Superannuation Trust.
In August 2021, Maritime Super’s MySuper product made the Australian Prudential regulation Authority’s (APRA’s) list of underperforming default funds.
More equality in super called for
The Association of Superannuation Funds of Australia (ASFA) is calling for the Government to commit to equalising super for men and women by 2030.
The super gap – that is, the difference between men and women’s balance when they retire – has been falling but is still at 23 per cent, ASFA says.
“As we recognise International Women’s Day in 2022 and the theme #breakthebias, we are calling for support for women who take time out of the workforce to have or care for a baby,” ASFA senior policy adviser, Helena Gibson, said.
According to ASFA economic modelling, much of the inequity that happens when women leave the workforce to have children could be reduced for a woman earning $80,000 – and eliminated for a woman earning $60,000 or less – by introducing Superannuation Guarantee on paid parental leave, and a Super Baby Bonus of $5,000 for each child a woman gives birth to or adopts.
“Results of a recent ASFA survey show that more than 80 per cent of people agree that government should try to boost the super balances of women who take time out of the workforce to have children,” Gibson said.
Despite these findings, it was revealed on International Women’s Day no less that the Government would not be adding super to its paid parental leave scheme.
Government expects super funds to divest Russian investments
Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume and Treasurer Josh Frydenberg have called on superannuation funds to review their investment portfolios and take steps to divest any holdings in Russian assets as the Russian invasion of Ukraine continues.
“While Australian superannuation funds only have a small exposure to Russian investments in the context of the $3.5 trillion superannuation system, it is important that Australia sends a clear and unequivocal signal that we condemn in the strongest possible terms Russia’s unprovoked and unjustified attack on Ukraine,” Hume and Frydenberg said in a joint press release.
The announcement was supported by the Financial Services Council (FSC), who said they would develop guidance for superannuation trustees and fund managers to help them divest Russian assets.
“The FSC will work with members to help them navigate how this guidance may be implemented in each of these circumstances,” the FSC said in a statement.
Levy to lead Quality of Advice Review
The Federal Government has announced that Allens partner Michelle Levy will lead its Quality of Advice Review. It also released the terms of reference for the review, which will probe regulation of the financial services industry.
Minister for Superannuation, Financial Services and the Digital Economy, Senator Jane Hume, said the review would investigate:
- whether there are opportunities to streamline and simplify regulatory compliance to reduce costs and duplication;
- how to improve the clarity and availability of documents provided to consumers; and
- whether parts of the regulatory framework have created unintended consequences.
Industry associations, such as the SMSF Association, broadly welcomed the appointment of Levy.
“A specialist in superannuation, life insurance, distribution and financial services law, Levy will bring the necessary expertise and experience to this critical issue of over-regulation that is confronting the financial advice industry,” SMSF Association chief executive officer, John Maroney, said.
Senator Hume said the review will invite submissions from the public and is due to provide a report to Government by December 2022
Majority of former Dixon clients to transfer to E&P
E&P Financial Group has announced that 70% of former Dixon Advisory and Superannuation Services (DASS) clients have asked to transfer to Evans & Partners.
Dixon Advisory filed for voluntary administration in January 2022 following a number of class actions and an Australian Securities and Investments Commission (ASIC) fine for failing to act in their clients’ best interests. Evans & Partners had merged with Dixon Advisory to become Evans Dixon in 2017.
In its interim results, E&P Financial said that in addition to the 70% transferring, 16% of former clients had expressed a desire to exit, with 14% of clients yet to advise of their preference.
“The Group intends to contribute a sum equivalent to the $8.2 million in penalties and costs agreed by DASS in the ASIC Proceeding for the benefit of creditors as part of a comprehensive settlement of all DASS and related claims,” E&P said in its second half results announcement.