SMSFs miss out on billions due to contributions caps

22 February 2011
| By Caroline Munro |
image
image
expand image

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

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day 19 hours ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day 19 hours ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 20 hours ago