Changes to super

A number of important changes to superannuation have been introduced in 2019.  They’re designed to ensure low balance accounts aren’t eroded by fees – and that you’re not paying for insurance you don’t know about or need – giving your super the very best chance to grow. 

So it could be time to check your super to make sure you know exactly how the reforms may affect your super account.

Here’s a quick summary of the main changes.

Insurance within super cancelled on inactive accounts

From 1 July 2019, you won’t be able to take out or maintain insurance cover in your super if your account has been inactive (no contributions or rollovers received) for a continuous period of 16 months, unless you tell your super fund that you want to keep it. Learn more about changes to insurance within super. 

Changes to insurance within super for low balance accounts and for members who are under 25

From 1 April 2020, you can only keep insurance cover within your super account if your account balance reaches $6,000 and you are 25 or older, or you tell your super fund you want to keep it.  Learn more.

Inactive super accounts with low balances transferred to the ATO

From 30 June 2019, your super fund may be required to transfer your super account to the Australian Taxation Office (ATO) if your account balance is below $6,000 and has been inactive for 16 months or more. From October 2019, the ATO will proactively reunite any balances it holds on your behalf with another active account where possible. Learn more about inactive accounts being transferred.

Fee cap

If your super balance is below $6,000 at the end of the financial year, you’ll pay no more than 3% that year in administration fees, investment fees and indirect costs.

Exit fee ban

All exit fees on super accounts have been banned.

Other changes

Catch-up concessional contributions

If your total super balance is less than $500,000 on 30 June of the previous financial year and you have not fully used your concessional contributions cap in any of the previous five financial years, you may be able to make additional concessional contributions above the standard cap (currently $25,000) up to the value of your unused cap amount. Unused cap amounts can only be accrued from 1 July 2018.

Work test exemption

If you are over 65, you may be eligible to make a personal contribution to super without having to meet the work test. Generally, if you are aged between 65 and 74 you need to meet a work test exemption to make personal contributions to super. The work test means you must be ‘gainfully employed’ for at least 40 hours in any 30 consecutive day period in the financial year in which the contribution is made. 

From 1 July 2019, an exemption from the work test applies if you met the work test in the previous financial year and your total super balance was less than $300,000 on the previous 30 June. This means, if you’re over 65, you may be able to make a personal contribution to super for an extra year.

 

For more information on the government’s ‘Protecting Your Super’ changes go to moneysmart.gov.au.

For more information on concessional contributions refer to ato.gov.au.