February 28, 2017

My first article in this series outlined up-coming changes to super contributions caps. As a member of a super fund or trustee of a self-managed super fund (SMSF), you should consider very carefully how these changes will affect you and your overall wealth accumulation strategy.

To check the impact of the new cap levels on your wealth accumulation strategy, you will need to reassess your expected end position and the length of time it will take to achieve your target super balance. The fundamental question to ask yourself is this: ‘What will I need to do, given the constraints imposed by the new rules, to accumulate the sum required to fund my retirement needs?’

A word of warning: If, like many families, you are planning to ramp up your super contributions once the home loan is paid and the kids have flown the coup, I strongly advise you to reconsider. If you wait too long before beginning large super contributions, the new cap limits may seriously compromise your ability to accumulate the desired level of superannuation wealth by the time you retire.

Conversely, if you already have contribution strategies in place, you may need to review them now to ensure that existing plans are not in breach of the caps. Checking your regular savings plans and salary sacrifice arrangements is a good place to start as penalties apply if you exceed the new contribution caps.

If you have a sizeable super balance, there are other considerations and caps to take into account. For instance, once you have reached a $1.6m cap your future non-concessional contributions cap will be nil. This could impact you if you have significant funds, such as from an inheritance or the sale of an investment property, that you wish to contribute to your super fund. If you are approaching the new $1.6m caps, and you are likely to be affected in this way, you may wish to consider reducing your contributions so that you don’t reach your $1.6m benchmark until you reach retirement age. Failure to consider a new contribution strategy under the new rules may mean that you are unclear about how much super you will have at retirement and whether it will meet your needs and expectations.

Please accept my invitation to contact me or your BNSW Planning advisor for advice so that you fully understand how the new rules affect your individual circumstances. We can review your super balance, in alignment with your retirement plan and retirement lifestyle expectations. For recommendations on appropriate adjustments to your wealth accumulation strategy that take the new super rules into account, please contact BNSW Planning on (02) 8252 5555 or email geoffreyf@brentnallsnsw.com.au

BNSW Planning Pty Limited, a wholly owned subsidiary of BrentnallsNSW Pty Ltd, holds a limited Australian Financial Services (AFS) licence and is fully compliant under 2016 legislation governing the delivery of super and SMSF advice by an accounting firm. For further information, please view our Financial Planning series of articles:

  • 2016 brings regulatory changes to advice on super – What’s the buzz?
  • Don’t get caught out by super advice changes
  • BrentnallsNSW super solution

Related Links:
2017 Superannuation Reforms Video Presentation & Handout

The information and advice provided is general advice only. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. Neither BNSW Planning Pty Ltd as Corporate Authorised Representative of Akambo Pty Ltd trading as Accountants Private Advice (AFSL 322056) nor its authorised representatives make any representation or warranty as to the accuracy, reliability or completeness of material in this site, or in sites linked to this site. Except to the extent that liability under any statute cannot be excluded, BNSW Planning Pty Ltd as Corporate Authorised Representative of Akambo Pty Ltd trading as Accountants Private Advice (AFSL 322056) nor its authorised representatives do not accept any liability (in contract, tort, negligence or otherwise) for any error or omissions in this material or for any loss or for any loss or damage (direct, indirect, consequential or otherwise) suffered by any person.