Increasing SMSF members from four to six gets green light

03 September 2020

SMSF Association Media Release

The SMSF Association welcomes the introduction of a Bill into Parliament that will increase the maximum number of allowable members in a self-managed superannuation fund (SMSF) from four to six.

First announced in the 2018-19 Federal Budget, the increased maximum will help larger families to include all their family members in their SMSF.

SMSF Association CEO John Maroney says: “Although the number of funds that take advantage of this policy change may be small, the increased maximum has our support because it brings greater flexibility and choice to the SMSF sector.”

The Association also welcomes the passage of legislation that gives individuals the right to choose their own superannuation fund.

The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019, which was passed by the Senate in this sitting period, will give employees free choice about which fund receives their compulsory Superannuation Guarantee (SG) payment.

Maroney says: “It’s always been our policy position that giving employees the right to choose their own fund is an important element in promoting an efficient and competitive superannuation sector.

“The situation where employees were constrained in their choice of fund had, in our opinion, a negative effect by disengaging people from their superannuation, reducing competition, and increasing the proliferation of superannuation accounts.

“It not only affected younger people but also older members transitioning to retirement who might have an SMSF. A typical scenario was for these people, working in part-time jobs under the umbrella of an enterprise agreement, being forced to have their SG paid into a default fund and not their SMSF. This was clearly inequitable.”

Maroney also calls on the Government to prioritise passage of the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 before the end of this parliamentary sitting.

This legislation ensures the bring-forward arrangements to make up to three years of non-concessional contributions will be extended to people aged 65 and 66. This will align the legislation with the recently extended work test.

 

“These changes recognise the need for older Australians to have greater flexibility as they transition to retirement. With work patterns constantly changing, it’s imperative to have a legislative framework that provides the opportunity for older Australians to accumulate sufficient savings for a secure and dignified retirement.”