It’s Time For Public Servants In The CSS And PSS To Take Notice Of The Latest Superannuation Changes!

The new superannuation changes take effect from 1 July 2017 and for members of some defined benefit superannuation schemes these changes are significant.

For members of the Commonwealth Superannuation Scheme (CSS) and the Public Sector Superannuation (PSS) Scheme things are about to change significantly, and for the worse. Currently the unfunded portion of employer contributions to the CSS and PSS for contributing members are ignored for the purpose of determining their Concessional Contribution Cap, but that is about to change!

From 1 July 2017 a notional employer contribution for CSS and PSS members will be reported to the Australian Taxation Office and with the associated reduction in the annual Concessional Contribution Cap to $25,000, salary sacrifice contributions may need to be scaled back significantly.

For members of the CSS and PSS, the calculation to determine the maximum amount that can be salary sacrificed to superannuation is about to become more complicated. CSS and PSS members who are currently maximising their salary sacrifice entitlements will also need to account for the fact that their last payday for this financial year falls on 29 June 17.  There is therefore a real risk that the last salary sacrifice payment from this financial year may be received by their superannuation after 30 June and count towards next year’s concessional contribution cap of $25,000.

With all of this complexity, isn’t it great to know that our business, The Financial Advice Shop, has experts available to help you make sense of all this and can provide assistance where required. If you feel you might benefit from a Financial Advice Health Check in preparation for the latest round of superannuation changes that commence on 1 July 2017, contact us without delay.

In a complex world, there has never been a better time to contact us to see how your financial situation could be improved.


Perhaps There Really Is A Simple Way For First Home Buyers To Access Their Super That Makes Sense?

If we think outside the square a little bit and consider using super as an investment for first home buyers rather than a deposit, then perhaps some different approaches could be seriously considered?

A lot of the discussion to date has been aligned with using super as a deposit. One of the main problems with this approach is that it is very inconsistent with the purpose of super.

If we were to consider the use of super as an investment it might make more sense?

Consider the following example:

A first home buyer couple have $50,000 in their super and they use these funds as an investment in their first home which they purchase for $500,000. The super proceeds represent a 10% initial investment and is registered accordingly.

If a framework was Legislated that stipulated that the super fund proceeds (in this example representing the 10% investment) must be repaid to the couple’s super accounts, in proportion, when the property is eventually sold then perhaps the whole idea might make sense? This idea could be integrated into other first home buyer initiatives and might for example encourage first home buyers to salary sacrifice to super in preparation for buying their first home?

In this example, if the property was eventually sold for $600,000 then $60,000 would be returned to the couple’s superannuation accounts.

Clearly some changes in super Legislation would be required but the first home buyers could benefit from having access to more money to buy their first home, it might encourage them to stay in their first home for longer and their super eventually gets a material boost as long as the property is sold for a profit.

Unfortunately this idea does have some downside as it would increase demand from a wider pool of desperate first home buyers in a property market that is already overheated in some areas.

There can, however, be no doubt that creating a generation of Australian’s who cannot get into the property market is bad for our society on a range of levels.