Superannuation continues to be an area of political discussion and potential change. While investment returns are generally good, the system’s unpredictability undermines people’s confidence.
Brad Eppingstall, director of RSM, said, “superannuation rules continue to be in flux in Australia and this is causing some dissatisfaction with the system. Constant changes and media reporting on potential changes has caused many Australians to lose confidence. Some are looking to manage these changes/control risk through self-managed super funds (SMSFs)”.
According to RSM’s latest thinkBIG study, SMSFs continue to grow in popularity with 53 per cent of respondents using a SMSF compared with 48 per cent last year and 45 per cent in 2013.
Brad Eppingstall said, “this growth is consistent with what RSM has seen in clients setting up SMSFs, namely that business owners are looking to utilise SMSF’s as a means of business planning/succession planning. For people looking to buy a business property, using funds from a SMSF can be an attractive option.
“Additionally, SMSFs are more attractive to business owners as a source of asset protection and a way to plan for retirement away from the business”.
The current tax discussion paper focuses on the adequacy of retirement income, of which superannuation is a key part. These conversations are likely to continue in the short-term as the population continues to age. At the moment there are five working people for every retired person but this is forecast to drop to 2.7 in the future. This means retirees are less able to rely on the aged pension and should plan early to ensure their superannuation will be enough to support them into very old age.
Brad Eppingstall said, “as the next 12 months unfold, SMEs are likely to need support around setting up their SMSF in the most tax-efficient way possible while complying with all the rules and regulations. Businesses will also need to keep a close eye on the potential changes to the superannuation system”.
thinkBIG has measured the pulse of the Australian SME sector since 2005. It benchmarks business growth and profitability, business planning, exit planning, superannuation and the impact and uptake of technology. 446 business owners participated in the 2015 study, providing insights into how Australian SMEs feel about their business.