Martin Breckon
A ban on exit fees, the ATO helping you track down lost or forgotten super and no insurance for young people with low balances are among changes in the 2018 federal Budget that will help people get more out of their super.
Martin Breckon, IOOF Head of Technical Services, said: “After some major changes this decade it’s gratifying to see the Coalition continuing to bed down superannuation policy, as well as helping people – especially young people just starting out in the workforce – build their retirement nest egg.
“Every penny you put in in the early years compounds nicely at the other end of the pipeline and will help build a sustainable retirement.”
IOOF also welcomed the announcement that the ATO will help reunite workers with their lost or forgotten super.
“With today’s mobile workforce it’s very easy for time-poor breadwinners to lose track of their super, and this move will help people to consolidate their accounts and minimise account fees.”
In other changes, all Australians of Age Pension age will have access to the improved Pension Loan Scheme. The Pension Work Bonus will be increased and extended to the self-employed.
Super also got attention with a series of integrity reforms, changes to self-managed super funds (SMSFs) and small APRA funds (SAFs).
From 1 July 2018, SMSFs and SAFs can increase to six members and SMSFs with good track-records can move from annual to three-year audits.
From 1 July 2019:
- Members over age 65 will not have to meet the work test to make contributions to super in the first year after they stop working. This is so long as their super savings are less than $300,000.
- Exit fees will be abolished on all super accounts.
- For super accounts under $6,000, administration and investment fees will be limited to 3%, measured half-yearly, and capped at $90 per six months.
- Inactive accounts under $6,000 will be transferred to the Australian Taxation Office (ATO) to be consolidated with the member’s active account.
- Opt-out insurance will be banned for those under 25 or if there is less than $6,000 in the super account.
- The ATO will undertake a review of the section 290-170 Notice system to ensure that members put in their notice before getting a tax deduction for personal contributions.