Older SMSF Members The Big Losers from Reforms

May 22, 2017

Australians with SMSFs, particularly those aged over 49, will be much harder hit by the Super Reforms than government statistics suggest, and will be looking to their accountant and adviser to help them.

Those who have not had the benefit of compulsory super contributions their entire working life, chiefly Baby Boomers and older members of Generation X, will be significantly impacted by the cut in the concessional contributions cap to $25,000 because of their need to make “catch up” super contributions in later life.

The new analysis on the impact of the changes comes from the Class SMSF Benchmark Report for the March 2017 quarter.

While the government figures produced for the 2016 Budget show that only 3.5% of super account holders made concessional contributions over $25,000 a year, implying only a tiny percentage would be affected by the lower cap, the Class analysis shows that 25.9% of SMSF members over the age of 49 made annual contributions greater than that in FY2015 (the latest year for which there are complete data).

In dollar terms, 90% of the savings the government will make from this measure comes from those aged 49 and older.


Even among SMSF members under the age of 49, 17.3% contributed greater than $25,000. Their contributions averaged $29,800 each, very close to their $30,000 cap.

The Class analysis shows that for a significant percentage of SMSF members, the super reforms legislated in 2016 could throw a hefty spanner into their contributions strategy and overall wealth plan. Overall, 31% of SMSF members are likely to be affected by the changes in 2017-18, compared with the government’s figure of 4% for all super account holders.

These will be the people relying on their accountant and financial planner in the coming months to advise them how they can structure their super and other investments to try to mitigate the impact of the government’s changes.

Other key findings of the SMSF Benchmark Report include:

  • Older SMSF members will also be impacted more heavily by the reduction in the non-concessional contributions caps. The government figures say less than 1 per cent of super account holders make more than $300,000 in NCCs in a 3-year period (using the bring forward rule). However, Class figures show that for SMSF members aged 49 and over 10.6% made NCCs greater than $100,000 a year (FY2015) and in the 33 months to March 2017 – still three months shy of the end of this financial year – 6.9% contributed more than $300,000.
  • 8% of SMSFs have at least one member with a super balance greater than $1.6m and will be unable to make further non-concessional contributions under the new rules or be allowed to transfer the full amount to pension phase due to the $1.6m transfer balance cap. This compares with the government’s figure in the 2016 Budget that less than 1% of super account holders have a total super balance of more than $1.6m.
  • Further, an additional 1.6% of SMSF members under 65 have balances between $1.4m and $1.6m and will therefore have their bring-forward contribution caps cut back under new rules for members with balances in that range.

To find out more about how the Super Reforms will impact your SMSF clients, download the Class SMSF Benchmark Report here.

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