Top adviser queries on super and contributions

Financial adviser concerns are back to pre-COVID worries, as the top queries from advisers were about superannuation and contributions, according to BT. 

BT technical consultant, Tim Howard, said the dominant theme from advisers were that they were getting “back to business” as most of the additional social security measures had ended and advice proprieties were now focused back on longer-term retirement planning and building wealth. 

Howard said the most asked questions from advisers during the March quarter were surrounding bring-forward contributions.  

The queries were on the proposed legislation on the ability to make bring-forward non-concessional contributions into their super but not in relation to the changes in the bring-forward age (From under 65 to 67). The questions were on the additional proposals around employer contributions, concessional contribution limits, and COVID-19 early access integrity measures. 

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“While it is unlikely that the age increase will be opposed, nonetheless, the delay serves as a reminder to be cautious about providing clients with any advice outside of what is the law at the time,” Howard said. 

BT said the delay resulted in advisers having to consider hypothetical scenarios, particularly for clients who are about to turn 67 years old. Currently those clients would have a non-concessional limit of $100,000. Should the rules change, effective from 1 July, 2020, as proposed, they might have a non-concessional limit of $300,000 – if their total super balance is below $1.4 million. 

Questions on the indexation of the transfer balance cap (TBC) was the second most asked as there was confusion as to how much of the TBC (to $1.7 million from $1.6 million) applied to each client, as the indexation took into account the highest transfer balance cap amount a client had previously attained. 

“Clients who have not used any of their cap previously will benefit from the new maximum; those who have only used some of the previous cap will benefit from the increase proportionally; and those who have previously transferred up to the $1.6 million maximum will not be able to take advantage of the increase,” BT said. 

Indexation more broadly was the third most asked about topic which related to existing legislation. 

“Existing legislation provides guidance on the indexation requirements, without providing an actual dollar figure. Fortunately, the Australian Taxation Office has just updated their Key super rates and thresholds webpage, which provides advisers with additional certainty around the dollar value of these various indexation outcomes,” Howard said. 

The fourth most asked about topic was fee consent and ongoing fee arrangements as from 1 July, 2021, advisers needed to obtain annual client consent for ongoing fee arrangements. 

BT noted that further clarity was needed to address privacy concerns on providing details of multiple accounts with different providers. 

“In this case, one consent form is not practicable, and a possible solution may require the use of multiple forms,” it said. 

The fifth most asked about question related to self-managed superannuation fund (SMSF) property transfers as property values were rising across the country. 

“Advisers are also asking about the impacts of transferring property into a client’s SMSF, with the intention to have an asset of value appreciate over time in a concessionally taxed environment,” BT said. 

“In addition, limitations and considerations related to transferring property out of SMSFs to allow clients to use the property personally, generally at retirement, are generating queries from advisers.”