The 2018-19 Federal Budget has been delivered, with the broad settings for the Australian superannuation system largely remaining the same.
However, there were several announcements in the budget related to superannuation. These included:
- Insurance through superannuation will become opt-in for members who have account balances of less than $6,000, are under the age of 25 years, or whose accounts have not received a contribution in 13 months and are inactive. These members will still have the opportunity to obtain insurance through their superannuation if they choose to do so. The changes will take effect on 1 July 2019, and those that fall into this category will have 14 months to decide whether they will opt-in to their existing cover or allow it to cease.
- The capping of passive fees at 3% for accounts with a balance of less than $6,000. These changes will take effect from 1 July 2019.
- Exit fees will be abolished, meaning if you move from one superannuation fund to another there will be no cost to you. These changes will take effect from 1 July 2019.
- In an effort to consolidate individuals’ superannuation accounts and minimise the erosion of account balances by fees and insurance costs, all inactive superannuation accounts with balances under $6,000 will be transferred to, and held by, the ATO. These changes will take effect from 1 July 2019.
- For people aged 65-74 with superannuation balances below $300,000, a one-year exemption from the work test for voluntary super contributions will be put in place in the first year that they do not meet the work test requirements. The work test exemption will apply from 1 July 2019 and is intended to give recent retirees additional flexibility to get their financial affairs in order in the transition to retirement.
Further detail on the superannuation-related announcements in the 2018-19 Budget can be found at www.budget.gov.au