Property might emerge as winner from super tinkering

Superannuation fund bosses have warned that funds could flow out of superannuation accounts following government changes announced last week that will see income streams above $100,000 taxed at a rate of 15% from July next year.

Alex Hutchison, chief executive at Energy Industry Super chief executive, said people with higher superannuation balances might consider other options outside of super such as property.

“More people will change their affairs to negatively gear and go into property,” he said as part of a Money Management roundtable.

John Livanas, chief executive of public sector fund State Super warned of a “huge risk of outflows” from super as happened when the superannuation surcharge was introduced in 1996.

“The moment confidence reduces [in the super], the question as to whether to commute pensions come into question,” Livanas said.

Also participating in the Money Management roundtable, Tom Garcia, chief executive of the Australian Institute of Superannuation Trustees, held similar concerns.

The most recent APRA figures show that total estimated superannuation assets increased to $1.51 trillion in the December 2012 quarter, a 14.6% increase over the 12 months to December 2012.

As of December 31, 2012, self-managed superannuation funds held the largest proportion of superannuation assets accounting for 31.5% of assets with $474 billion compared with $410 billion at the start of 2012.

There were 496,000 SMSF funds at the end of the December 2012 quarter, up from 460,000 at the start of the year.

Retail funds account for 26.4% of total super assets. Industry funds account for 19.5% of total assets, public sector funds 15.7% and corporate funds 3.8%.

This article first appeared on Property Observer.

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