What could proposed superannuation changes mean for you?
04 August 2017
Attributed to Steven O’Donoghue, National Manager, Suncorp Advice
Superannuation – we all have it, but do you really understand it, and is it working as hard for you as it should be? For many people, the answer to both of these questions will be ‘no’.
However, with most people relying on their superannuation as the primary source for their retirement income, getting a handle on how it works and what you can do to maximise it is vitally important.
This is particularly timely with the government set to introduce a number of changes to Australia’s superannuation system including new consumer protections, as well as initiatives for first-home buyers and downsizers.
The government has recently released draft legislation to establish the First Home Super Saver Scheme, allowing first-home buyers to save for a deposit using their superannuation.
It means first-home buyers can make voluntary contributions to their super, taking advantage of tax incentives and earnings benefts, and then withdraw the money from their fund from 1 July, 2018.
There are some conditions – it’s only for first-home buyers, contributions can’t exceed $30,000 (up to $15,000 a year), and the money saved is to be used for a first-home deposit.
The new legistlation also introduces changes for Australian’s aged 65 and over, allowing them to make up to a $300,000 contribution to their superannuation if they downsize their family home regardless of work status, age, or superannuation balance
This is a special non-concessional contribution, and if the home is owned by a couple, both are eligible to contribute $300,000 each.
While these initiaitves are designed to help young Australians enter the property market, and free up exisiting housing stock by encouraging older Australians to downsize, the government also has other aspects of the superannuation industry in its sight.
It announced it will introduce legistation to make sure superannuation funds are acting in the best interests of their members by demanding greater accountability, and increasing the powers of the regulator.
The new rules will primarily apply to default MySuper products – the product super funds provide if an employee doesn’t choose their own. The changes include:
- Increased powers for the regulator, APRA, to take preventative or corrective action if it’s concerned about a super fund, or if it feels the super fund isn’t acting in the best interests of members.
- New requirements for annual assessments of the product outcomes to ensure the investment and insurance strategies are acceptable, fees are appropriate, and that scale and returns are also in the best interests of members.
- More accountability, with increased disclosure requirements and the funds will also be required to hold an Annual General Meeting to allow members to question fees, investment strategies and the general management of the fund.
- Changes that will make it easier for members to opt-out of insurance premiums.
With around 2.7 million Australians having more than one super fund, many could be paying multiple fees. This is particularly relevant to younger employees who may find their superannuation is being eroded.
Make the new financial year the time to get on top of your superannuation and your savings once and for all. And if it’s all just too much, consider seeking guidance from your financial planner who can help you get on track.
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Media Contact: Alexandra Foley 0419 794 294