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SMSFs miss out on billions due to contributions caps
The lowering of the super contributions caps has had a significant impact on retirement savings, with $15.1 billion less going into super as a result, according to research commissioned by the Self-Managed Superfund Professionals' Association of Australia (SPAA) and Russell Investments.
The research, which was conducted by CoreData-brandmanagement in November and December 2010, involved surveying 1,331 Australian consumers, of whom 431 were self-managed super fund (SMSF) trustees and 258 high-net-worth individuals without SMSFs.
SPAA chief executive Andrea Slattery said the research proved that the lowering of the contributions caps had a significant impact as the retirement savings of around half the SMSF trustees questioned had been limited. The research showed that this group would have contributed on average $72,704 each to their SMSF if contribution cap limits were raised, equating to a collective contribution of some $15.1 billion.
"We believe that this legislation is restrictive and prohibitive and counter to the intent of the Government to have super as the main retirement savings vehicle for Australians," Slattery said. She added that SPAA would like to see the contributions caps return to pre-2009 levels.
The research also found that trustees were working longer with more than half (53.2 per cent) intending to work part-time post-retirement compared to 32 per cent of non-trustees.
"As trustees work longer, government should look at extending age limits for non-concessional contribution caps to 75 years old," Slattery said.
She added that clarity was needed around the borrowing in super rules, as the research found that while two in five advisers were advising on the rules, only one in five trustees were interested and even less were borrowing. Some 76 per cent of trustees have not borrowed to invest and do not plan to do so, the research showed.
However, confidence in the super system remained, with three in four SMSF trustees (74.0 per cent) saying they were confident in super as a vehicle for retirement savings, significantly higher than the proportion of non-trustees who share their level of confidence (53.6 per cent).
AUTHOR
Caroline Munro
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