1. Removal of work test in first year of retirement for individuals 65-74
If you were 65 or older you previously could not make contributions to super unless you met a work test (working 40 hours over 30 consecutive days) or the downsizer contribution rules. There is now a new rule that allows individuals between 65 and 74 in the first year of their retirement to make voluntary contributions into their super account without needing to satisfy the work test. The relaxation of the work test rules only applies once and you cannot make contributions in subsequent financial years without meeting the work test. To qualify you must have had less than $300,000 in your super account at the end of the previous financial year.
2. Commencement of Carry forward concessional contributions
From 1 July 2019, individuals can make catch-up concessional contributions into their super fund using their unused concessional contributions cap amounts from previous years. To qualify, individuals must have a Total Super Balance of less than $500,000 on 30 June of the previous financial year and must not have used all of their $25,000 annual concessional contributions cap in the previous financial year. Under the rules, individuals can carry-forward up to five years of unused concessional contributions caps for use in a later financial year, but the rolled forward amounts expire after five years. The five-year carry-forward period started on 1 July 2018, meaning FY20 is the first year in which catch-up contributions can be made. If you are aged 65 or over, the normal work test rules apply.
3. Cancellation of insurance within inactive super accounts
As part of the Protecting Your Super reforms, super funds will be required to cancel the insurance cover of accounts deemed to be inactive. Under the legislation, super accounts are considered inactive if they have not received any contributions or rollovers for more than 16 months. The fund will be required to inform the member that the insurance will be cancelled unless the member agrees to opt-in to retain the insurance cover.
4. Closure of inactive super accounts
Inactive super account with a balance of less than $6,000 will be automatically closed and the balance transferred to the ATO, which will then use data matching technology to combine the low balance amount with one of the member’s active super accounts.
5. Cap on fees for low balance accounts
Super accounts with a balance of $6,000 or less at financial year end will have their super fund fees capped at 3% per annum.
6. Switching funds without exit fees
Exit fees will be banned, allowing members to switch between super funds without having to pay any exit fee.
Copyright © 2019. The information provided is not personal advice. It does not take into account the investment objectives, financial situations or needs of any particular investor and should not be relied upon as advice. While the information is provided in good faith and believed to be accurate and reliable at the date of preparation, we will not be held liable for any losses arising from reliance thereon. We recommend investors consult their personal financial adviser to discuss suitability and application to their individual circumstances. Advisors at Pitcher Partners Sydney Wealth Management are authorised representatives of Pitcher Partners Sydney Wealth Management Pty Ltd, AFS & Credit Licence number 336950.