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Super debates should raise confidence, not doubts

Michael Hutton  |  14 Feb 2013Text size  Decrease  Increase  |  

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Michael Hutton is head of wealth management at accountants and financial advisers HLB Mann Judd Sydney.


Recent political and treasury discussion about possible changes to superannuation should not put doubts into people's minds about its attractiveness, particularly the benefits of self-managed superannuation funds (SMSFs).

Superannuation is still an excellent tax-advantaged vehicle for retirement savings and the types of changes that were recently discussed do not change this for the vast majority of people.

Indeed, the discussion about superannuation changes should encourage more people to consider SMSFs because of the flexibility they offer and the ability they give to members and trustees to react quickly to any changes that may be introduced.

Although many of the possible changes being discussed in recent weeks have now been rejected by both sides of politics, this is not to say they will never arise again.

However, a couple of useful indicators did come out of the discussion.

One is that both major parties appear to recognise the growing electoral clout of retirees and would be concerned about bringing in changes across the board that affect retirees too much.

Another is that while many of the changes discussed were big-ticket items in terms of revenue collected, the impact on most super fund members was relatively small - it is the total impact of revenue collection that the treasury is after and small amounts multiplied by the total number of super fund members soon add up.

In addition, even if there is a change in government, any amendments the new government might introduce are still a couple of years away, and the opposition has already indicated any changes they make would be grandfathered.

This means making the maximum contribution now - and taking other steps such as setting up an SMSF sooner rather than later - seem sensible.

The present government has also made it clear that their approach is aimed at the very wealthy and is not going to affect the vast majority of fund members.

Furthermore, both sides of government and the treasury are very aware that the incentives in the current superannuation system help reduce reliance on social security, saving them a major cost.