SUPERCentral News
APRA figures for the year ended 30 June 2008 (the most recently release figures) indicate that the largest super sector (by asset value) is the SMSF sector.
One aspect of the GFC which has not received much media attention is the impact of the decline in asset values on defined benefit superannuation schemes.
Recently released APRA/ATO statistics suggest that in 2007/08 super contributions equalled 25% of total salary and wages.
Budget season is fast approaching – only about 50 contributing days to Budget 2008 – so what will happen on the super front?
The union movement – courtesy of the ACTU – is making the first soundings of an increase in the Super Rate from the current level of 9% to 12% or even higher. The increase is proposed to occur over a number of years.
The Government has recently released a Consultation Paper on First Home Saver Accounts, which hopefully will be shortened to “Saver Accounts”.
The in house asset rules require that in house assets must not be more than 5% of the value of all assets of the fund, and also that a fund cannot acquire an in house asset if, as a result of the acquisition, the value of in house assets would exceed 5%.
A member contribution is any contribution other than a contribution made by an employer for a member.
The SIS Regulation 7.04(3) imposes a limit on the size of member contributions which the trustee can accept.
SMSFs which were established in 2007/08 are required to lodge their 2008 annual returns by 28 February 2009.
In yet another fetter on a person’s ability to direct where their assets will go after their death, the Uniform Succession Act provisions, agreed to by all States and recently passed in NSW in the Succession Bill, will give the Court the power to rule that a person’s Binding Death Benefit Nomination should not be followed or should be amended.
There seems to be growing speculation – from the super industry and from the trade union movement – that the 9% compulsory super should be increased to 15%.
The New South Wales Government’s recent announcement that it will pass laws to limit the fees lawyers can charge in contested estate disputes is really ‘much ado about nothing’.
This previously announced measure has now been included in the new Government’s first legislative change to Superannuation. Super lump sum payments to members who are terminally ill will be tax free. This measure will apply to payments made on or after 1 July 2007 (the previous Government proposed that the exemption apply from 12 September 2007).
The financial press has recently noted that Industry funds have outperformed their retails counterparts (outperformed in the sense of lost less) by almost 6% in respect of 2008, while for previous years the outperformance was 2%.
In light of several cases that have interpreted the definition of ‘dependant’ very widely, it may be that a larger class of persons than previously thought might qualify to receive part of a deceased member’s entitlement from a super fund.
While the Government has the Henry Tax Review – the tax review headed by Dr Ken Henry, the Treasury Secretary, and which is reviewing all taxes and government benefit systems – the Opposition has established the “other Henry” review, headed by leading industry economist, Dr Henry Ergas.
Given the relatively stringent preconditions for amounts to be released from super under either the Severe Financial Hardship or Compassionate Grounds release conditions and given the limited amount which generally can be released the Government should consider introducing another release condition for natural disasters.
Another ground for early release of benefits is on the basis of compassionate grounds. This release condition is for self managed superannuation funds administered by APRA.
The ATO has finalised the Business Real Property ruling. Apart from the 370 paragraphs and 107 footnotes which comprise the Ruling, the Ruling is a good read.