Although fundamental settings for superannuation and super tax arrangements have not changed, a range of other changes to superannuation were announced. The following is a summary of these.
The ‘Protect Your Super Package’
The Federal Government announced a package of regulatory reforms designed to protect Australians’ superannuation savings from potential erosion by fees and insurance premiums. Components of the package include:
- from 1 July 2019 insurance in superannuation will move from default to an opt-in basis for members with balances below $6,000, new members aged under 25 years, and members whose accounts have not received a contribution in 13 months and are deemed to be inactive;
- fees in superannuation funds will be capped at 3% per annum for account balances less than $6,000;
- a ban on all super fund exit fees; and
- accounts with balances below $6,000 and that are inactive will need to be transferred to the ATO, which will attempt to proactively reunite those accounts with active accounts.
Super trustees required to formulate retirement income strategy for members
Trustees will be required to develop a retirement income strategy for fund members to provide an income for life, aimed at supporting the Federal Government’s proposed comprehensive income product for retirement framework. While no commencement date for this change has yet been announced, the Federal Government will shortly issue a consultation paper outlining its approach to the new covenant.
Concessional Contributions Cap
Individuals earning more than $263,157 a year with multiple employers will be able to nominate that wages from certain employers are exempt from the Superannuation Guarantee from 1 July 2018 to avoid breaching the Concessional Contributions Cap.
Increase in members for self-managed super funds (SMSFs) and small APRA funds (SAFs)
From 1 July 2019, the maximum number of members for SMSFs and SAFs will increase from four to six. This change may lead to an increase in the number of SMSFs and SAFs.
MetLife is currently assessing in detail the implications of these announced changes on your Fund and members. Your Relationship Manger will be in contact to arrange a time to discuss these changes with you further. If you have any questions, please contact your Relationship Manager.