The government’s superannuation reforms are likely to push more people to set up self-managed super funds (SMSF), according to Assistant Treasurer Peter Dutton.
Speaking at last week’s conference of the Self-managed Super Funds Professionals Association of Australia (SPAA), Dutton said the new regime will make SMSFs even more popular.
“Simplified Super will especially benefit those individuals who are, or are considering, taking their retirement savings into their own hands using an SMSF,” Dutton said.
“I am advised a fairly typical SMSF member would be self-employed, 45, and earning $90,000 a year. They would contribute $12,000 a year to superannuation. Under Simplified Superannuation, this person could have an increase in their pension benefit at retirement of over $83,000 or $160 a week.
“For those without an SMSF, the increased attractiveness of super may motivate them to take control over their superannuation by establishing an SMSF, and using it as part of their overall financial strategy.”
He said the growth in do it yourself (DIY) funds presented challenges and opportunities to financial planners and accountants because clients will be looking to them for good advice to ensure the funds are compliant.
“Many trustees aren’t aware of the responsibilities and obligations of managing an SMSF,” he said, adding that from July 1 all new trustees will be required to sign a declaration to say they understand their responsibilities.
“Trustees must understand that there is no safety net in place to protect them, or their money, and that the fortunes of the fund ultimately rest in their own hands.”
Dutton said associations like SPAA will perform an increasingly important role in setting professional standards and providing education and training to accompany this growth.
In September 2006 the number of SMSFs had grown to over 325,000 funds with almost $220 billion in assets. They now account for approximately 23 per cent of superannuation assets and are growing at around 2000 a month.
