Money Magazines, Susan Hely recently wrote about the new superannuation rules starting on 1 July 2019. She notes that the super changes, called Protecting Your Super, were set up to stop Australians’ super accounts from being eroded by insurance fees and premiums they don’t need.
This is a great move for young people who were losing their valuable superannuation savings. But there are other people who may be impacted who want to keep their insurance.
Loss of insurance cover
If your superannuation account hasn’t received any contributions or rollovers for more than 16 months, it is considered inactive. It will cut off your death and total and permanent disability (TPD) insurance cover.
But before it does, your super fund is required to inform fund members that they are at risk of having their insurance cancelled.
Fund members have the option to retain their insurance cover even if they are not making regular super contributions.
Check with your super fund before the new super rules come into effect on July 1
Closure of inactive super accounts
Your super account could be closed automatically if you have an inactive super account with a balance of less than $6000.
The balance will be transferred to the tax office, which will then use data matching technology to combine the low balance amount with – if you have one – your active super account
Cap on fees for low balance accounts
One of the benefits of the new changes is a new cap on the fees charged on small super accounts with a balance of $6000 or less. However the capped fee level is quite high at 3% per annum.
Switching funds without exit fees
Another good move is that you will be able to switch from one superannuation fund to another without having to pay an exit fee. Exit fees will be banned so you don’t have to pay a penalty and are free to move from a bad super fund.
Catch-up concessional contributions
This is the first year you can make additional catch-up concessional contributions to your super fund, allowing eligible Australians to put more into super. You do this by using your unused concessional contributions cap amounts from previous years.
Rise in age pension work bonus
If you’re working and receiving the age pension you could be entitled to the Work Bonus, which excludes some of your pay from the Centrelink income test. This bonus is increasing from $250 to $300 a fortnight.
Pension Loans Scheme expanded
From July 1, 2019, the eligibility criteria and withdrawal amounts for the Pension Loans Scheme (PLS) will be expanded to make the scheme available to more Australians of age pension age.