Risk of clients ageing out of bring-forward contribution changes
Advisers will have a bit longer to wait to finalise terms of bring-forward contributions with clients after the Treasury Laws Amendment (More Flexible Super) Bill was deferred to the House of Representatives.
The bill had been due to pass on 17 June but delayed after amendments by One Nation leader Pauline Hanson.
Unlike other bills, advisers were anticipatory as the changes could apply before the end of the financial year which would mean individuals aged 65 to 66 would have time to make the most of the contributions.
Tim Howard, technical consultant at BT, said it already been delayed by 12 months due to COVID-19 and advisers were fearful their clients would miss the cut-off.
The bring forward contributions would be particularly useful if people were likely to come into a large sum of money such as via a house sale or an inheritance but would only apply to people aged 65 and 66. Therefore, many people had turned 67 during the legislative delay and were unable to make use of the contributions.
“This is our number one asked question as it would apply to the current financial year,” he said.
“With the delays, advisers are worried about their clients having their birthday and ticking over and therefore missing out or being unable to meet the works test.
“Advisers have been questioning what they can tell clients if it isn’t in the law yet, they want their clients to still have the opportunity to top up early before the end of the financial year.
“There won’t be much time to use it [this financial year] if it isn’t passed soon and some people will miss out but that is unavoidable. Hopefully some people will still be eligible next year as well.”
AUTHOR
Laura Dew
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