Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
The biggest contribution changes in a decade
Both houses of Parliament quietly passed what may well be the biggest changes to super contribution rules in a decade. With the Treasury Laws Amendment Bill just only awaiting Royal Assent, 2022 will see retirees and soon to be retirees provided with significantly greater flexibility in putting additional cash into superannuation.
The most important and powerful change will be the near abolition of the work test from 1 July 2022. Applying to those aged between 67 and 75, anyone seeking to make concessional and non-concessional contributions will no longer be required to work the required 40 hours in a period of 30 consecutive days in the financial year in which they wish to contribute. The opportunity is clearly significant.
This change extends an exemption granted just a few years ago through which those aged over 65 could make super contributions in the financial year after they retired as long as their balance was below $300,000; the work test exemption as it was called.
This work test exemption will also extend to the ability for retirees to make bring-forward contributions until attaining 75 years of age, and in some cases beyond this. That is, subject to normal contribution limits, being $110,000 per person, per year, a member is able to bring forward up to three years of into a single year during this period for a total of $330,000.
As is currently the case, this is limited to $110,000 or one year of bring forward for those with a Total Super Balance between $1.59 and $1.7 million, $220,000 for those between $1.48 and $1.59 million, and the full $330,000 for those with balances below $1.48 million. There is also a small loop hole which will allow a member slightly over 75 to make a contribution without having to satisfy the work test, as long as the contribution is made within 28 days of the end of the month that they attained 75 years of age.
The other most relevant change is the reduction in the Down Sizer contribution criteria, which allows a one off $300,000 contribution, outside of the normal caps, from the sale of one’s principal residence. The age limit will fall from 65 to 60 in an effort to get the property market moving once again.
