Some of it might have gone under the radar, but there was plenty of (proposed) good news in the Federal Budget for both young and old superannuants. Here’s a quick breakdown.
- Insurance in superannuation is to be on an opt-in basis for members with balances of less than $6,000, under 25s and members whose accounts have not received a contribution for 13 months and are inactive. These members will have 14 months to decide whether they will opt-in to their existing insurance cover. It means small balances, particularly those of young Australians who do not yet have dependants, will not be eroded by unnecessary fees,
- Exit fees – fees charged when you move from one super fund/account to another are to be completely banned and a 3% cap on passive fees in super is to be mandated.
- People aged between 65-74 will be exempt from the work test for voluntary contributions to superannuation if they have balances below $300,000 for the first year (that they do not meet those work test requirements). Currently if you’re in that age bracket and want to make a contribution to super you have to self-report as working 40 hours in any 30-day period in the financial year.
- SMSF audits will now only be required three-yearly, instead of annually, for SMSFs that have a history of good record-keeping and compliance, and for SMSF trustees that have a history of three consecutive years of clear and timely audit reports.
- A proposed increase in the number of members in SMSFs and small APRA regulated funds to six from four (this was flagged prior to the Federal Budget).
- The Pension Work Bonus will be increased from $250 to $300 per fortnight so aged pensioners can earn up to $7,800 each year in addition to their pension.
- The Superannuation Industry (Supervision) Act 1993 will be amended to introduce a retirement covenant to require superannuation trustees to formulate a retirement income strategy for superannuation fund members.
- The pension means test rules will also be amended to encourage the development and take-up of lifetime retirement income products.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.