Why you should lobby your local Federal MP to amend the poorly structured Budget changes to Superannuation
More than one million Australians use an SMSF to manage their retirement savings, as opposed to those reliant on retail, corporate and public sector funds. The knowledge that a government is likely to plunder their savings retrospectively at any time will dramatically reduce their confidence to invest in the superannuation system, which had begun to nation build as funds invested in the share market filter through into infrastructure and other building projects.
When SMSF funds compete with APRA funds to provide a viable alternative, the ensuing competition also tends to keep a lid on costs, so increasing balances over time and assisting members to become self-sufficient. SMSF members have an average of $502,000 in their accounts compared with $146,000 for corporate funds, $97,000 for public sector funds, $39,000 for retail funds and $36,000 for industry funds (source: APRA’s 2015 Annual Superannuation Bulletin – 2015), but interestingly at age 65 and over (according to ATO statistics), SMSF members funds are worth about an average $1 million, precluding members need or eligibility to go on the aged pension.
Both SMSF holders and the public interest are aligned regarding superannuation, in that the combination of investing a hitherto growing pool of savings in Australia through the medium of the share market, contemporaneous to reducing the number of future pensioners, has much more to offer the budget bottom line over time than a poorly conceived and convoluted budgetary measure which will reduce rather than raise future government revenue. 262
Tax revenue reduces when more people go on the aged pension as it becomes harder for SMSF funds to contribute sufficient monies acquire enough assets to comfortably retire. Revenue then drops more due to SMSF consumer confidence diminishing that SMSF rules won’t be continuously changed to enable an incumbent government to raise more revenue, and the problem will be exacerbated further when people alternatively put savings into their homes to increase any related free capital gains to be had, so complying with current means testing to enable them to receive an aged pension. Government outlays in the form of providing a social security net correspondingly increase, and this the main deficiency of these new proposals, which hopefully will be rejected by the Senate on common sense grounds.