Meg's Musings

6 Jul 2021

Meg Heffron

Managing Director

Well one financial year ends and another begins.

At Heffron we were fortunate to kick off the new year with a (positive) bang – we heard we’d won the 2021 SMSF Administration Provider award from SMSF Adviser magazine. 

There’s something rather special about being able to tell your team that their clients not only appreciate their service but also care enough to fill in a survey to say so. Thank you for all your support directly or indirectly in helping us win this award.

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It's fair to say, bigger things were afoot in the world.

The 2021 Intergenerational Report (released 28 June 2021) made for sobering reading. I’m sure it doesn’t surprise anyone that our population continues to age thanks to longer life expectancies, lower fertility rates and exacerbated by lower migration. But still, some of the key figures are stark – today around 16% of the population is over 65 but by 2060 it’s expected to be 23%. Currently, we have around 4.0 working-age people to every 1.0 person over 65 but in 2060 that’s expected to be 2.7. That brings into sharp focus the importance of the work all of us in this industry are doing to support retirement savings. We may not be inventing vaccines, solving climate change, or curing cancer but we are helping a larger and larger cohort save for a dignified old age. And given that a lot of our tax revenues currently come from income taxes, they will definitely need to save!

(That said, the projection of fertility rates suggests that if the new 6 member SMSF rules were introduced to allow more people to share an SMSF between the whole family, it would have been fine to leave the maximum number of members at 4.)

Of course, reports like this are specifically written as if Government policy will remain unchanged over the life of the projections. In fact, I assume one of the great benefits of the report for any Government is that it can inform future changes to policy. It does make you wonder how much longer we will enjoy some of the superannuation tax concessions that our older clients value most – for example, tax free superannuation pensions and tax free investment income in their SMSFs during pension phase. Even something as simple as moving the age from which tax free superannuation applies from 60 to 65 or even 67 is surely not off the table. But equally, if the name of the game is personal savings to take the pressure of the age pension, will we see improved flexibility around contributions, particularly for those with lower balances? One thing is for sure. When laws change, it’s almost always invaluable to have the most nimble superannuation vehicle around – an SMSF.

And what else might the new financial year bring?

Hopefully an end to lockdowns / stay-at-home orders and – one day – a return to live and in-person education. Although I suspect these will supplement rather than replace the online education we have learned to love. I’d like to see the Government implement some of the important announcements in the May 2021 Federal Budget. Several were proposed to take effect from 1 July 2022 so they’d better get their skates on.

I recently covered some of the pros and cons of diving into a six member fund here

But to ensure you are truly kept informed about everything superannuation and SMSF, including changes to legislation and ATO rulings and how they affect you and your clients, be sure to subscribe to the Heffron Super Companion. Find out more here.