What’s changed—and changing—in super and how might it affect you?
Protecting balances from being eroded by insurance premiums
The Government’s recently-passed Putting Members' Interests First legislation will apply from 1 April 2020.
The Bill will apply from 1 April 2020 and affect a large number of UniSuper members.
Key changes include:
- Members joining from 1 April 2020 who are under age 25, and those with account balances that haven’t exceeded $6,000 on or after 1 November 2019, will only be offered insurance cover on an 'opt-in' basis. (This is a significant change from the current arrangement, where new members automatically receive cover and must formally ‘opt-out’ if they don’t want it.)
- Existing members with account balances that remain below $6,000 on and after 1 November 2019 could lose their insurance cover.
We’ve started writing to members who may be affected to provide instructions on how they can keep their cover. Defined Benefit Division members aren’t affected by these changes.
Super for people with multiple employers
The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Act 2019 has now been passed.
If you have more than one employer, you may be eligible to negotiate an exemption from receiving super contributions in order to avoid breaching your concessional (before-tax) contributions cap.
To do this, you can apply to the ATO for an ‘employer shortfall exemption certificate’. Note that there are eligibility criteria and the ATO can refuse your application.
It’s also important to note that due to legal obligations on your employer (like enterprise agreements and our Trust Deed), it’s unlikely an exemption certificate would enable them to change the rate of contributions they make to UniSuper on your behalf.
If you’re thinking about applying for an exemption certificate, we recommend you check with both the ATO and your employer to confirm your eligibility.
Reviewing Australia’s retirement system
In September, the Treasurer announced details of the upcoming Retirement Income Review.
The Review was a recommendation of the Productivity Commission and will look at the three pillars of the existing retirement income system—the Age Pension, compulsory super and voluntary savings. It’ll be led by former Treasury economist Michael Callaghan and includes panellists Carolyn Kay (a Future Fund Guardian) and Dr Deborah Ralston.
A consultation paper is likely to be released in November 2019, with the final report to the Government due in June 2020.
More changes coming to the financial services industry
In August, the Government released its Financial Services Royal Commission Implementation Roadmap, which sets out how and when it will respond to the wide-ranging recommendations of the Royal Commission. It also aims to give clarity to consumers, industry and regulators.
According to the Roadmap, the Government will implement about 90% per cent of the Royal Commission’s recommendations by mid-2020, with legislation for the remaining 10% to be introduced by the end of 2020.
The Government will consult on its legislation but we expect that any changes impacting super will be introduced by 30 June 2020. We’ll keep you up to date about any changes that affect you.