‘Protecting your super’ changes
From 1 July 2019, new arrangements to protect your super balance from erosion by inappropriate insurance and fees will apply:
- cancellation of insurance: super funds will cancel insurance on accounts that haven’t received contributions for at least 16 months. Your fund will contact you if your insurance is about to end. If you want to keep the insurance through your super, you must tell your super fund or make a contribution to that account. You may want to keep your insurance if you don’t have any through another fund or insurer and you have a particular need for it (e.g. you have children or other dependants or work in a high-risk job).
- no exit fees: there are no exit fees if you leave your super fund.
- fee limit on low-balance accounts: annual administration and investment fees can’t exceed 3% of the balance of accounts with less than $6,000. Your account balance is calculated at the end of the fund year.
- inactive account transfers to ATO: accounts with less than $6,000 that are inactive for 16 months will be transferred to the ATO. The ATO will merge it with your other active super account. If you don’t have another active account, the ATO will keep your super safe.
For more detail on these changes, see the full article on our website https://news.wealthwise.com.au/important-super-insurance-and-centrelink-rule-changes-commencing-1-july-2019/ or contact your adviser.
Get financial advice
Planning for your retirement is complex and it’s important to get advice from people with specialist knowledge.
It’s never too early to start thinking about your super. Take steps now to get the retirement lifestyle you want.
In addition to these super changes, there are some important Centrelink changes that also come into effect on 1 July 2019:
The Work Bonus allows most pensioners who’ve reached age pension age to disregard the first $250 per fortnight of their employment income under Centrelink’s income test. From 1 July, this will increase to $300 per fortnight, which also means the maximum unused fortnightly amounts you can accrue will increase to $7,800 per annum, up from $6,500. So you’ll be able to earn more from work before your pension reduces.
Additionally, from 1 July 2019, the Work Bonus will be extended to include eligible earnings from self-employment.
Assessment of lifetime income streams
Lifetime income streams (such as lifetime and deferred annuities) will be assessed differently under the social security income and assets tests if they are purchased on or after 1 July 2019. If you are considering commencing a lifetime income stream, the choice of whether to purchase it before 1 July, or on or after 1 July, could therefore make a big difference to your level of social security entitlement. Your financial adviser can explain more about the changes and how they could impact your financial situation.
Get the right advice
The changes to super and Centrelink rules will affect people in different ways. So before you make any decisions about your financial strategy, talk to your financial adviser. They can provide more information and give you the guidance you need to make the right decisions about your finances.