Originally published by: The Financial Review
By Kate Cowling.

Speculation about when and how the government will change the superannuation system has frightened savers out of topping up their retirement pool.
Instead of channelling their wealth into the tax-friendly vehicle, some pre-retirees say they are keeping their money in their savings accounts and investing in asset classes they deem “safer”, including property, term deposits and shares, advisers say.

The government’s biggest tax decisions concern superannuation.

Following Prime Minister Malcolm Turnbull’s assertion all tax reform options are on the table, a raft of policy changes have been suggested by both government and think tanks, the latest of which includes an $11,000 yearly cap on pre-tax contributions.

But advisers say the policy uncertainty has caused many to try to shield their savings from future changes by keeping it somewhere it cannot be retrospectively targeted by reform efforts, even if that means facing more tax.

“People say ‘I’ll always invest in property or shares, but never in superannuation,” said Andrew Zbik, an adviser at Omniwealth, who points out prospective clients sometimes believe super is its own asset class. “It’s a common misconception.” This is despite the fact pre-retirees can still invest in shares and property through their super fund at a much lower tax rate.

However, non-advised savers often tell Mr Zbik they have “little confidence in super as a savings vehicle” and see investment markets as safer bets, simply because the they won’t be subject to policy change.
Property in particular had been a proxy for savers worried about the safety of the stability of current super settings, said Jonathan Hoyle, CEO of advisory Stanford Brown.