31 July 2019
Interested to know what recent changes to superannuation legislation could mean for your retirement savings? Here are the key super rules in place.
Protecting Your Super reforms from 1 July 2019
These reforms are designed to protect Australians' retirement savings by ensuring their super isn’t unnecessarily eroded by fees and premiums on insurance policies they may not need.
So it could be time to check your super to make sure you know exactly how the reforms may affect your super account.
Insurance within super cancelled for inactive accounts
Super providers need to cancel the insurance in any super account considered inactive. An inactive account is any account that hasn’t received any contributions or rollovers for more than 16 months.
Before taking action, your super provider must tell you that you’re at risk of having your insurance cancelled and give you the opportunity to choose to keep your insurance. You can stop your insurance being cancelled by letting your super provider know that you want to keep your insurance.
Making a super contribution or rollover into an account that’s considered inactive will also stop the insurance cancellation from going ahead. Making regular contributions can also prevent an account becoming inactive again.
The legislated start date for this measure is 1 July 2019. If your account is identified as inactive your super fund must attempt to contact you before then to give you the opportunity to choose to retain your insurance.
Inactive super accounts with low balances will be closed
Many inactive accounts with a balance of less than $6,000 will be closed, and the balance transferred to the Australian Tax Office. The ATO will then use data matching to connect these super accounts with an active account of the member where possible.
Cap on fees for accounts with low balances
Fees will be capped at 3% pa for accounts with $6,000 or less at year end.
Switch funds without paying an exit fee
You’ll be able to switch super funds without paying a penalty as exit fees will be banned.
Other superannuation changes from 1 July 2019
Pension work bonus going up to $300 per fortnight
If you’re working and receiving the age pension you could be entitled to the Work Bonus, which excludes some of your pay from the Centrelink income test. This bonus is increasing from $250 to $300 a fortnight, meaning you’re able to keep more of your income, or work for short periods with little or no effect on your age pension.