Q&A: I have over $3m in super so should I now consider a recontribution strategy?

Q: I am over 60 and my wife is well under. I have over $3 million in my super and my wife has very little. I have put off employing a recontribution strategy to even the super balances, to avoid triggering super pension phase and mandatory withdrawals – but with looming new tax changes, I am rethinking. The downside is that I am required to make minimum drawdowns (normally 4% but currently 2%) but don’t see as major issue given I need the money to recontribute. Have I missed anything, or assuming proposed changes make it into law, strategy seems sound?

A: The proposed changes to super increase the tax on earnings for accounts which are in excess of $3 million. So, if you’ve got more than $3 million (in super), then again, you might need to think about that. But what this proposal has done has put an increased focus, or the focus back on what I think is a real need to consider equalising spouse super balances. This strategy around equalising spouse super balances became really relevant when the new transfer balance cap (TBC) rules came in (2017).

This was one was when once member’s super balance was well above $1.6 million (TBC as at 1 30 June 2017) and one member well below. The same thing needs to be thought about if the $3 million new cap applies. What’s the use of having someone well above it and one spouse well below it? So having as equal as possible member balances inside super for spouses is, of course, still important and probably even more important.