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Are you really making the most of your super?

Posted by Pacesetter Financial Services

The Government has announced significant changes to the super reforms that were proposed in the May Budget1. While we view this as a positive outcome with further clarity around super, the reality is that the ability for Australians to put money into this tax effective environment is continually being limited. To really make the most of your super and to benefit from its critical role in your overall financial planning, we invite you to contact us. We would like to discuss with you your super opportunities in the light of the recent Government announcements and to suggest any appropriate changes to your strategy.

The changes to the proposed superannuation reforms are as follows (please note that further changes could result as the legislation passes through the Lower and upper Houses):

  1. The $500K lifetime Non Concessional Contributions (NCC) Cap has been dropped.
  2. The Government has instead announced a reduction of the current annual NCC Cap from $180K to $100K from 1 July 2017. This will mean you can continue to contribute NCCs of up to $180K, and use the bring forward rule to $540K this financial year. The 3-year bring forward provisions will remain as per the current provisions based on the lower cap. No Non Concessional Contributions will be allowed once the proposed $1.6 million transfer cap has been reached.
  3. The reduction to a $25K concessional contributions cap will remain in place and commence from 1 July 2017.
  4. The concessional contribution catch up provisions have been delayed and will now not commence until the 2019/2020 financial year.
  5. The Government has confirmed that Division 293 tax on Super will be reduced to individuals with salaries above $250,000 p.a.
  6. The Government has changed its mind on the removal of the work test for those aged over 65.

While we await the final outcome of the super reforms, we offer three tips to help you make the most of your super.

TIP 1 – Wealth Accumulation
If you are using super to accumulate wealth for a comfortable retirement, you would be wise to consider other tax effective wealth accumulation strategies to complement your super.

TIP 2 – Asset Allocation
If the legislation does cement restrictions on the amount that you can contribute to super, this will place even more pressure on investment returns. The most important influence on your portfolio’s long-term performance is asset allocation. An appropriately diversified portfolio may help you work towards your financial goals and manage your investment risk.

TIP 3 – Investment Choice
There are a plethora of options when it comes to investment portfolios. It is important to make an active choice in relation to how your superannuation is invested. Key issues such as asset class choice, diversification, active management, cost and income generation are all important aspects to consider, with the most appropriate options varying depending on your individual situation.

We encourage you to take up our invitation to discuss your super strategies. Please contact our office on (07) 3808 2808 or email clientcare@pacesetter.net.au.

1 http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/Superannuation-Reforms

Pacesetter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 trading as Fortnum Financial Advisers.

This information (including taxation) is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Pacesetter Financial Services strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.