BT head of financial literacy and advocacy Bryan Ashenden said advisers are preparing for a busy 2022, with the Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 currently before Parliament and a raft of regulatory changes happening on the professional development front.
“Even though the bill relating to budget 2021 has not yet passed, many advisers are getting on the front foot, and identifying opportunities for clients to build their retirement savings. Since most of these changes are not due to take effect until 1 July 2022, there is ample time to prepare,” said Mr Ashenden.
Based on calls to the BT’s technical services team from advisers for the last quarter of 2021, Mr Ashenden said the top item’s on adviser’s to-do lists for this year are completing the FASEA exam, catching up on the consultation process regarding Standard 3 of the Code of Ethics, and reviewing client advice to assess the impact of the removal of the work test for non-concessional contributions for clients between ages 67 and 74.
Revisiting strategies relating to the lowering of the age for downsizer contributions and keeping an eye on regulatory developments for certain complying income streams were other priorities for advisers.
Commenting on the passage of the Better Advice legislation and the release of accompanying regulations, Mr Ashenden said it’s now clear that an “existing relevant provider” may have until 30 September 2022 to successfully complete the FASEA exam.
However, Mr Ashenden clarified that advisers would only be given the extension if they had made at least two unsuccessful attempts by the end of 2021. For those advisers who left it until the last sitting to make their first attempt and were unsuccessful, there will be no extension.
“The implication, based on current law, is that these advisers will have been removed from the Financial Adviser Register as at 1 January 2022, and will no longer be able to provide personal advice to a retail client,” said Mr Ashenden.
In terms of the budget measures, changes to the work test requirements remain top of mind for advisers.
“This is not surprising, since it was confirmed the ‘bring forward’ opportunity would indeed be available for 66 and 67-year-olds for the last financial year, just before 30 June 2021, with the passage of the Treasury Laws Amendment (More Flexible Superannuation) Act 2021,” said Mr Ashenden.
“Advisers are raising questions about the future operation of the bring forward regulations from 1 July 2022. It appears that the bring forward opportunity will now extend beyond age 67, and then phase out as clients approach age 75, although further clarity is required on this point.”
With the intention to lower the qualification age to 60 from 1 July 2022 for downsizer contributions, Mr Ashenden said advisers are also revisiting this strategy.
“Further, with the rise of property values, the potential to sell the family home, and still be able to buy a property to live in during the retirement years, plus have the ability to put some extra money into super, is proving to be very popular,” he said.
Mr Ashenden said advisers have also been asking about the 2021 budget announcement about the ability to exit certain complying income streams.
“Unfortunately, this measure was not included in the bill recently introduced into Parliament, so advisers will have to wait a bit longer to know the exact details of how this will work. It is expected to take effect from 1 July 2022,” he stated.
“For certain clients, particularly those in a self-managed super fund, this could provide a great opportunity to exit out of income streams that had been established for life, especially where the members have only stayed in the SMSF because they had no way to exit the income stream product. This could result in some pensioners finally being able to exit and close down their SMSF if it is no longer the most suitable retirement product for them.”
