While we won’t know until the 18 May if the recent Federal Budget will be destined for the recycle bin, here is a quick summary of the superannuation-specific measures.
- Improved flexibility for people aged 65 and 66 (the work test)
The ability to make voluntary contributions (both concessional and non-concessional) will be extended to those aged 65 and 66 without meeting the work test from 1 July 2020. They can also make up to three years of non-concessional contributions under the bring-forward rule. Those up to and including age 74 will be able to receive spouse contributions as opposed to the current restriction applying to those 70 and over.
This is a positive move allowing more time and flexibility to plan for superannuation contributions.
- ‘Protecting Your Super’ Package
These are amendments to the package announced in last year’s Budget to transfer inactive accounts to the ATO, including redefining when an account is considered inactive. This also incorporates the change for ensuring insurance within superannuation is only offered on an opt-in basis for balances of less than $6,000 and new accounts belonging to members under the age of 25 years.
There are several reasons why it would be legitimate to hold an account that is considered in-active under the new rules. This would include retaining a superannuation account with a minimum balance solely for the insurance where it is either cost-effective or pre-existing medical conditions preclude obtaining another policy. While the onus is on the superannuation fund to contact members impacted, it is important to keep your contact details up to date so you can opt-in where appropriate.
- Superstream extension
Superstream is an electronic standard for the transfer of information between employers, superannuation funds and the ATO. If you have an SMSF and you are employed, chances are that we have you already connected on Superstream if your employer supports it. However, the mandatory start date for SMSFs will be delayed until 31 March 2021 to coincide with the expansion of the overall standard.
- More money for ASIC, APRA and the Federal Court
In total, the Government is providing $607 million to facilitate the response to the Financial Services Royal Commission including ‘taking action’ on all 76 recommendations (even if that means not adopting some of them, such as with mortgage brokers).
Watch for more active regulators with increased firepower!
So, all in all, there is not much for the superannuation industry to get excited, or complain, about. However, this will be in stark contrast to what may be around the corner if there is a change of government in Canberra as I have previously written about here.
The information provided should not be considered personal financial advice as it is intended to provide general advice only. The content has been prepared without taking into account your personal objectives, financial situations or needs. You should seek personal financial advice before making any financial or investment decisions.