Non-concessional contributions tops the list of questions to the BT Advice Technical team in the September quarter 2016.
BT Head of Financial Literacy and Advocacy, Bryan Ashenden, said the non-concessional contributions cap is “easily” the most topical question his team was getting from advisers. According to BT inquiries about non-concessional contributions to super doubled in the last month.
“Advisers are looking to know whether their clients may be affected, how much they can contribute this year and next, and how the transitional arrangements will work where a client has triggered, but not yet fully used their non-concessional contributions under the bring-forward provisions.”
The Government announced a $500,000 lifetime non-concessional contributions cap in the 2016 Budget. However this policy was later changed to lowering the annual cap and restricting non-concessional contributions for people with high superannuation balances. These changes have now passed, contained in the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016.
After non-concessional contributions the leading query to advisers are the changes to Centrelink pension changes from 1 January 2017 and the changes to superannuation pensions from 1 July 2017.
“The reality is that many clients will likely see some change in their pension entitlements. Advisers are acutely aware of this and quite rightly so. We’re seeing advisers getting on the front foot and taking the lead to ensure a ‘no surprises’ approach with their clients. We know having those discussions earlier on can make a big difference to clients feeling comfortable with any legislative change, said Mr Ashenden.
“It’s important to note that there is a silver lining. If there are changes to your client’s pension, they will likely be eligible for a low income care card, and if they’re of retirement age, they will receive the commonwealth seniors health card,” he said.
Mr Ashenden said early engagement with clients about future changes is key. “You can start the planning now for when the changes happen, giving more scope to implement the right approach at the right time,” he said.