At the start of the conference recently held in Adelaide, the Chief Executive Officer and Managing Director of the SMSF Association, Andrea Slattery, stated that the Association is a leader in the SMSF space and that the “industry has now been recognised by the Government as influential and important”.
The theme of the conference was the Lifecycle of the SMSF Trustee, and included topics such as:
Retirement or Draw-Down
Here are some of the highlights of various presentations:
SMSF Investing: The Difference between Males and Females
Females are less likely than males to set up their own SMSF to gain more control over their investments
Following a separation, divorce or death of a trustee, females are more likely to make changes to their SMSF to align with their own investment goals. Males are more likely to maintain the strategies they already have in place.
(According to a February 2016 study by the Commonwealth Bank and the SMSF Association)
Treasurer Scott Morrison: ‘Tax-Free Super Pensions safe from government tinkering’
Tax-free superannuation pensions will be safe from any changes considered by the Federal Government for the super system ahead of the May budget.
The Treasurer assured the delegates that Australians would not be taxed in the pension phase as the government looked to provide certainty and stability for the sector.
“The super system can do with refining and that’s part of the reason people are turning to the SMSF sector. We want to see the sector deliver more options” said the Treasurer.
Super Should Sit Alongside Tax in Regulatory Hierarchy
Regulators are working more closely to ensure higher education and compliance standards are achieved for professionals in the SMSF industry.
“Super should be sitting next to tax. It’s not just symbolic, but reflecting the status of the industry in our world now”, ATO commissioner Chris Jordan stated.
In 2015, the ATO looked at 2200 registered SMSFs, excluding 300 trustee from the system and placed restrictions on 800 of them.
Problems were focused on trustees inappropriately accessing or withdrawing from funds.
A Big Bang at Age 65: The Opportunity of a Lifetime
Those heading to retirement, aged between 45 and 65, were a diverse bunch in an important saving phase who needed to consider:
- Maximising tax concessions via concessional contributions by using salary sacrifice
- Watching for key changeover dates to higher concessional caps
Those aged under 45 have some of the highest accumulated super of any generation at the same age. They contribute more to super via salary sacrifice rather than paying off the mortgage. This is considered “mathematically” better but harder for most to come to terms with emotionally.
“Paying compulsory super is nowhere near enough for retirement” - Meg Heffron, Actuary.
Sticking to the 9.5% rate for one’s whole life would leave retirees with only 30% of their yearly income at retirement compared to the year immediately prior.
Take the Holistic View (of Investing)
The 5 most common behavioural biases of investors are:
Self-control (favouring short-term gains over long-term gains)
Cognitive dissonance (failing to change one’s mind even when all available evidence contradicts their view)
Groupthink (the urge to follow the herd)
Be awake to the warning signs of Dementia
1 in 10 people aged over 65 and 3 in 10 people aged over 85 will likely suffer dementia.
Dementia can have an impact on a client’s ability to make sound financial decisions.
The disease is likely to strike as individuals enter the pension phase of superannuation.
A range of strategies need to be developed to identify problems and help individuals plan.