The most recent Federal Budget from the Treasurer outlined some changes to the self-managed super funds (SMSF) that so many Australians are already taking part in, including those around Bankstown. With that in mind, it’s important for anyone who is a member of a self-managed super fund to take another look at their financial plan, and make sure it’s going to work in the best way possible.
We sat down with Rajeev Dixit to talk about exactly what people should be doing to better their wealth-creation strategies for the future.
Getting to grips with the Budget
“Three major changes that have been announced include a lifetime cap on non-concessional contribution of $500,000. Two other changes that will come into effect from July 1, 2017 include a reduction to the annual concessional contribution cap, and a lifetime cap on the purchase price of a superannuation pension of $1.6 million,” said Rajeev.
“What we’re recommending is that all super fund trustees review their accounts.”
With these changes coming into effect, will your fund need to be changed to take advantage of your financial future being in your own hands?
“Whilst at present these are only proposals and have not been legislated, What we’re recommending is that all super fund members review their current strategies and future plans,” continued Rajeev.
“Many taxpayers are following a recontribution strategy, which, with proposed capping of non-concessional contributions, may need to be modified. You don’t want to hit your cap without realising, leaving all of your carefully laid out plans in tatters. While this strategy could still be useful, it needs to be reviewed based on your personal plans.”
If the last time you reviewed the investment strategy in your SMSF was more than a year ago, it’s certainly time to talk to a specialist in Bankstown.
Who is being affected?
“An average-wage earner is unlikely to feel the impact of these changes. However, people with high earnings, or people who are close to retirement and now wish to beef up their super savings may feel the pinch,” stated Rajeev.
“The current market volatility reinforces the age-old principle of not having all of your eggs in the same basket.”
“However, anyone who has super, even in small amounts, should be getting it reviewed regularly. They need to take care of their super fund, whether or not it’s an SMSF, because it will be their biggest savings account come retirement. In light of these changes, if you have more than $500,000 in your super, you should definitely be revisiting the investment strategy with your financial advisor.
The current market volatility reinforces the age-old principle of not having all of your eggs in the same basket. We encourage you to speak to your advisor as soon as possible to make sure your investment strategy is still appropriate and is working for you, and if changes need to be made then you are being proactive and not reactive.”
Is it time you had a look at the way your SMSF is performing in light of these changes? Contact DBS Accountants today.
Rajeev Dixit is Authorised Representative 1239763 of Merit Wealth Pty Ltd, Australian Financial Services Licence 409361, ABN 89 125 557 002