Question 1

• We are a retired couple in our 70s who own our own house, have a small SMSF (self-managed super fund) of $150K. We each also have Defined Benefit Pensions and a small age pension. We are looking at selling our house and plan to downsize and move closer to town.  After the sale of our house and purchase of new house we should have leftover about $500K.  We no longer want a SMSF; we would like to invest our leftover in a joint super or separate super accounts depending on advice. As retired public servants and former union members we are keen to invest with industry super funds.
  

My key questions are:

• Can we have a joint pension phase account in any industry super fund?

No. Individuals must have their own super funds.

Where some people get confused is where they are coming from an SMSF, and they are both members. However, each member of the SMSF must have their own account and balance within the fund.

• Is there any industry super fund that does not invest in fossil fuel mining or processing, forestry and other unethical industries? Could you recommend some ethical industry super funds?

Most industry super funds have one or more ethical or ‘ESG’ (Ethical, Social and Governance) investment options.

This includes funds like AustralianSuper, Hostplus, CareSuper, Brighter Super and Vision Super, which all have ethical options and good performance.

You would need to read their investment guide to ensure their ethical policies and investments match your requirements.

• In the process of moving, we plan to spend the SMSF and close it down to reduce our financial complexity. Is this a good idea?

As people age, they often want less complexity.

Given your modest SMSF balance, closing it down sounds like a good idea. Note that you don’t need to spend all the money from the SMSF. You can transfer (or roll over) your respective balances to an industry super fund of your choice.

• Do the ethical industry super funds you may suggest have financial advisers we might be able to discuss our plans with in more detail?

Yes. All the funds I listed above have financial advisers within those funds that could assist you in your planning.

Question 2

• Hi Craig – I am an avid reader of your column. I am 68 years old and retired. I currently own an investment property but plan to sell this in January/February. I would like to use the proceeds to contribute the maximum amount possible (by way of non-concessional contributions) to my superannuation fund. My super balance at time of retirement was about $850,000. I am aware that, from July 1, 2021, the non-concessional contribution cap is $110,000 per annum. I am also aware of the ‘Bring Forward’ rule which allows non-concessional contributions up to three times the annual non-concessional contributions cap to be made in one financial year i.e. $330,000.
• My question is this: Can I legally make a non-concessional contribution of $110,000 in one FY and then wait until the next FY and make another non-concessional contribution of $330,000 using the bring forward rule. In effect, making a total non-concessional contribution of $440,000 over two FYs? Thank you. Regards, Greg

Hi Greg,

Yes, you have all the basics correct.

The non-concessional ‘cap’ is per financial year. So yes again, you can make a $110,000 non-concessional (after tax) contribution in 2023-24 and by using the bring forward rule make a further non-concessional contribution of $330,000 in 2024-25.

Effectively this strategy can be done within a couple of weeks of each other. For example, the $110,000 could be made in June 2024 and the $330,000 in July 2024 as they are in separate financial years.

One thing to keep an eye on is whether the superannuation contribution caps will be indexed up in 2024-25.

I’m expecting they will be, but we will have to wait for the AWOTE figures (which measures average weekly earnings) to come out in February to be sure.

If they are indexed, the concessional cap (before-tax contributions) would go to $30,000.

The non-concessional cap is always four times the concessional cap, so that would go to $120,000. And using the bring forward would mean you could contribute $360,000 (three x $120,000) next financial year.

We will just have to wait and see.

Craig Sankey is a licensed financial adviser and head of Technical Services & Advice Enablement at Industry Fund Services

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

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