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Editorial - Superannuation e-news September 2007

Tuesday 11 September, 2007 by Michael Perry Whilst most of the new superannuation rules were in place on 1 July 2007, the final piece in the Simpler Super puzzle will fall into place on 20 September 2007. This will include the halving of the asset test taper on the one hand resulting in an increase in the level of assessable assets that may be held by retirees while still being eligible for some Centrelink benefits. It also involves the elimination of all asset test concessions for newly commenced pensions. Obviously for purposes of SMSFs new Market Linked Pensions will be affected since other new pensions do not currently have such concessions.
This editorial seeks to remind readers contemplating Centrelink strategies that a critical milestone is nearly upon us. For those who are seeking to reduce the notional level of superannuation assets - for purposes of the asset test - they should consider commencing a MLP before 20 September 2007. New rules will be in place on that date that will eliminate the scope for initiating such action in the future. Those who do not intend to access Centrelink benefits however should feel skeptical about any suggestion of commencing an MLP because the new Account based pension offers many other and perhaps more attractive features.
For those with existing pensions existing asset test concessions will be maintained after 20 September 2007. But importantly for those seeking to reduce the value of their assets for purposes of asset test compression with MLPs this avenue will not be available from 20 September 2007. What this should inevitably lead to is that from that date onward there is unlikely to be any demand for new MLPs.
Last week the regulator released the official statistics on the take up of SMSFs in the last quarter to June 2007. There is a significant increase in the number of new funds that are reflected in these figures. At the end of June the total number of SMSFs was just a shade under 360,000 with the average value of the fund increasing to just over $800,000. An interesting statistic is that during the last quarter of the financial year the number of new funds was about the same as the net increase in the previous full year. Many new trustees were no-doubt motivated by the 30 June 2007 cut off date for the $1,000,000 transitional contribution cap and the improved flexibility and tax efficient receipt of benefits available through Simpler Super are certainly also factors that have contributed to this picture. The popularity of SMSFs is undeniable and although these funds may not be the answer to everyone's superannuation needs clearly their true value is being recognized increasingly, particularly by those in the know.