Changes to superannuation insurance won’t jack up rates – but if anything they don’t go far enough

The life and disability insurance offered by superannuation accounts can be the best possible deal for members. But the experience is often bitter for younger people, who are “opted in” to insurance they won’t need until they have dependants, face administrative hurdles to opt out, and are often charged fees and premiums through multiple super accounts. Many see their small balances disappear entirely.

The latest federal budget proposes to turn this system around by making superannuation insurance opt-in for people younger than 25, and on accounts that are inactive or have a balance of less than A$6,000. However, the changes don’t address a more pernicious type of superannuation insurance – total and permanent disability (TPD) insurance. Read more...

$1.6 billion from super pocketed in budget instead of fixing problems

Over $1.6 billion raised from superannuation in the 2018 Budget goes to the bottom line instead of being used to fix issues like unpaid super and the super gender gap.

Industry Super Australia said the Government had missed an opportunity to tackle these issues by failing to re-invest the “windfall” $1.615 billion raised by 2018 Budget superannuation changes.

This “surprising” amount is raised by three superannuation changes – opt-in insurance for young people and low balance accounts, transferring inactive accounts to the ATO and a crackdown on tax deductions for personal super contributions. Read more...

Budget 2018: draft legislation released for super fee cap, insurance opt-in

The Government has released draft legislation for three of the superannuation changes announced in the 2018 Budget.

The 2018 Budget, which was released last night, included a number of superannuation changes. The Government has now released, for consultation, draft legislation for three of the changes:

  • Cap on some super fund fees, ban on all exit fees
  • Insurance in super to be opt-in for some
  • Transferring more super to the ATO, proactive payments

Cap on some super fund fees, ban on all exit fees

A ban on exit fees and a cap on super fund fees for small balances was announced in the 2018 Budget.

Super fund accounts with less than $6,000 will have administration and investment fees capped at 3% per annum. This will be calculated based on the balance at the start of each six month period, with a 1.5% cap applying for those months. Read more...

Superannuation association warns about 2018 Budget changes

The Association of Superannuation Funds of Australia (ASFA) has warned about the consequences of several of the superannuation changes in the 2018 Budget.

One of the superannuation changes announced in the 2018 Budget is moving insurance in super to opt-in instead of opt-out for young people and some other members. ASFA warns that this change risks a number of unintended consequences.

“Insurance in superannuation is one of the most cost and tax effective options to provide protection, particularly for the young and low income earners,” said ASFA CEO Dr Martin Fahy. Read more...

Budget 2018: ‘protecting your super’ boosts Budget bottom line

The 2018 Federal Budget includes ‘integrity’ changes to superannuation which boost the Budget bottom line, makes small improvements to SMSFs, and revisits a change the Government announced and then dropped.

Superannuation changes in the 2018 Budget:

Three-year audit cycle for SMSFs with good history

SMSFs with a “history of good record-keeping and compliance” will have an audit cycle of three years, instead of the current annual audits.

“This measure will reduce red tape for SMSF trustees that have a history of three consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner,” says the 2018/19 Budget papers. Read more...

SMSF maximum number of members to be increased from 4 to 6

The Government plans to increase the maximum number of members an SMSF can have from four to six, and extend SuperStream to SMSF rollovers.

Minister for Revenue and Financial Services Kelly O’Dwyer, speaking at the inaugural SMSF expo, said the Government appreciates the role SMSFs play in increasing competition in the super sector and the opportunity they give members to take a more active approach in their superannuation.

“That’s why today I am thrilled to announce that as part of the upcoming Budget, we will expand the limit on the maximum number of members in an SMSF from four to six,” said Minister O’Dwyer. Read more...

Taxpayers need new tools to comply with superannuation rules

Taxpayers need new tools to comply with the changed superannuation rules, says Tax & Super Australia in its 2018/19 pre-Budget submission.

The organisation used its pre-Budget submission, in part, to call on the Government to provide new online tools to help taxpayers comply with the new rules that took effect on 1 July 2017.

“To comply with the new law, affected taxpayers will have to keep track of various balances and transaction amounts in relation to all of their superannuation accounts, and ensure that they do not breach statutory limits. Currently, this information is often not able to be obtained instantaneously and may require time-consuming manual reconciliations.” Read more...

Minister argues against raising Superannuation Guarantee rate

A Government Minister has argued against increasing the Super Guarantee rate, and suggested that the superannuation industry is calling for increases out of self-interest.

The Government appears to be building a case, ahead of the Budget in May, for wages in the present over superannuation in the future.

“It would be wrong to think that the ‘super-guarantee’ is a guarantee of someone’s present lifestyle in retirement,” said Minister for Revenue and Financial Services Kelly O’Dwyer at the AFR Banking and Wealth Summit. Read more...

Reduce lost super member threshold back to $2,000: AIST

AIST is calling for a reduction in the threshold at which ‘small’ lost superannuation member accounts are transferred to the ATO, from the current $6,000 back to $2,000.

In the past the ‘small’ lost super account threshold at which superannuation was transferred to the ATO was $200. This was increased to $2,000, then $4,000, and then to the current $6,000.

AIST recommends, in its 2018/19 pre-Budget submission, that this threshold should be progressively reduced – to $4,000 on 1 January 2019 and then to $2,000 in 2020. Read more...

SMSF Association calls for transparency in SMSF levy

The SMSF Association is seeking increased transparency around the SMSF supervisory levy, including a review of its level.

“We believe greater transparency will ensure that SMSF trustee fees are used to regulate the sector with increasing efficiency, regulatory improvements, and an appropriate levy amount,” says the SMSFA 2018/19 pre-Budget submission.

“The SMSF levy has risen from $150 in 2009-10 to $259 in 2012-13, with no increases since then. This was a 73% increase in three years; and a 35.6% increase from 2011-12 to 2012-13.” Read more...