Updates to Superannuation – Guide for New Legislative Changes in 2019
Background
Upon the most recent Hayne’s Royal Commission reform, there have been a few changes that superannuation members should be all be across. Amongst these legislation changes, the Australian Government is aiming to assist superannuation consumers by reducing the excessive fees charged to their super funds, and cracking down on negligent behaviour of superannuation trustees.
A few of the legislative changes that may be applicable and beneficial to you include:
Insurance within inactive super accounts
It is important to know if your superannuation is currently inactive. Insurance policies within super funds will automatically be cancelled if deemed to be inactive (if there have been no contributions or rollovers for more than 13 months).
Super funds are required to contact their members, however it is highly recommended to contact either your super fund or financial adviser if you believe this is applicable to you.
Closure of inactive super accounts
An inactive super account (meeting the criteria above) with a balance of less than $6000 will be closed and transferred to the ATO. Contact your adviser or super fund for more information if needed.
Capped fees
If your superannuation balance is under $6000, there will be a cap of the amount of fees that can be charged. This is capped at 3% of the total balance.
Relaxation of Work Test for retirees aged between 65-74
If you are between these ages, you are now able to make voluntary contributions into your account without passing the work test (minimum of 40 hours in any 30 consecutive day period). This is a once off voluntary payment and does not apply in subsequent years.
Catch up concessional contributions
Didn’t make any concession contributions in previous years? If you are regretting not taking advantage of the $25,000 cap, you are now able to catch up and contribute up to 5 years of unused concessional contributions. These rolled forward amounts expire after 5 years. To qualify, you must have a balance less than $500,000 and must not have used all of your non-concessional contributions in the previous year. The normal work test applies for any persons over the age of 65. For more details on this, you can read our article ‘Super Catch-up Concessional Contributions’.
Removal of exit fees
You are now able to switch to any superannuation fund without incurring the extra exit fee, which could have deterred you from doing so in the first place. This is encouraging superannuation members to transfer to improved super funds without the burden of a cost.
For more information on any legislation changes or how it effects you, contact your financial adviser or professional.