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Here is an overview of the Federal Budget announcement, and what it means for you and your superannuation. Please note, these changes have not been legislated yet and need to pass to become law.

Protecting Your Super package

To prevent super accounts with low balances being eroded by fees, the Budget reforms include the following changes, proposed to be effective from 1 July 2019;

  • Superannuation funds will no longer be able to offer default insurance cover if you meet any of the following criteria, and instead you will have to opt-in:
    > Your account balances of under $6,000,
    > If you are under the age of 25 and you open a new account, or
    > Your account has not received a contribution in 13 months and is considered “inactive”.
  • Capping investment and administration fees at 3% pa for accounts with balances of $6,000 or less.
  • Banning exit fees for all super accounts.
  • All “inactive” super accounts with a balance under $6,000 will be transferred to the ATO, who will be able to pay the balance into an active super account. Inactive accounts are accounts that haven’t had a contribution in 13 months.

Contributions work test

From 1 July 2019, people aged 65-74 with superannuation balances under $300,000 will be allowed to make voluntary contributions for the first year they no longer meet the work test requirements. The exemption is intended to give recent retirees additional flexibility, including more time to boost savings, while transitioning into retirement. Existing contribution cap rules will continue to apply. You can find more information on contribution caps here.

Super guarantee (SG) opt-out for high income earners

From 1 July 2018, if your income exceeds $263,157 and you have multiple employers, you can nominate which wages will not be subject to SG. This will allow people to avoid unintentionally breaching the $25,000 annual concessional contributions cap. You can find more information on contribution caps here.  

 Retirement income framework

The government announced a few initiatives on to the retirement income framework:

  • Simplified and standardised metrics to be included in product disclosure from funds to help with decision-making about retirement income products
  • The pension means testing rules will be amended to make lifetime retirement income products more attractive, and help individuals manage the risk of outliving their savings
  • To support the government’s proposed comprehensive income product for retirement (CIPR) framework, super funds will be required to develop a retirement income strategy for members, which will incorporate products that provide an income for life.

Personal contributions: better integrity over claims for a tax deduction

From 1 July 2018, the ATO will be given additional funding to develop new integrity models and undertake additional compliance activity. This will ensure that any deductible contributions are appropriately taxed by super funds and enable the ATO to deny deductions to people who do not comply with the notice of intention to deduct (NOI) requirements. Information about NOI can be found on the ATO website.

Support for older Australians

The Budget also included a range of measures intended to support older Australians. While these do not specifically involve superannuation, they will have an impact on people’s income and/or financial situation in retirement. These measures include:

  • An increase in earnings cap for the pensioner work bonus to $300 a fortnight. The pensioner work bonus enables pensioners to earn up to a threshold amount (currently $250 per fortnight, or $6,500 a year) without it affecting their pension. Only the portion of a pensioner’s earnings over that threshold will be counted towards the age pension income test
  • Expansion of the pensioner work bonus to include self-employed retirees, allowing them to earn up to $300 a fortnight without affecting their pension
  • The pensions loans scheme will be expanded to cover all Australians over age pension age, and to increase the maximum fortnightly income stream to 150% of the age pension rate. The pensions loan scheme effectively provides a reverse mortgage, to enable individuals to use the equity in their homes to increase their incomes by up to $11,799 for singles, and $17,787 for couples each year. Currently the scheme applies to part and some nil-rate pensioners, allowing them to top up their age pension to the maximum rate. It does not currently apply to maximum rate age pensioners or self-funded retirees.

Further information on the 2018/19 Budget is available at 

If you need help planning for your future, call us on 1300 300 820 and we will be happy to help.



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