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Super changes from 1st July 2019


In February 2019, laws were passed through parliament that will see some changes to super from 1 July 2019. These changes include:



Protecting your super reforms


These reforms are designed to protect retirement savings by ensuring super isn’t unnecessarily eroded by fees and premiums on insurance policies they may not be needed. 


Insurance within super cancelled for inactive accounts

Super providers need to cancel the insurance in any super account considered inactive. An inactive account is any account that hasn’t received any contributions or rollovers for more than 16 months.


Before taking action, your super provider must tell you that you’re at risk of having your insurance cancelled and give you the opportunity to opt-in to keep your insurance. You can stop your insurance being cancelled by letting your super provider know that you want to keep your insurance.


Making a super contribution or rollover into an account that’s considered inactive will also stop the insurance cancellation from going ahead. Making regular contributions can also prevent an account becoming inactive again.


The legislated start date for this measure is 1 July 2019. If your account is identified as inactive your super fund must attempt to contact you before then to give you the opportunity to ‘opt-in’ to retain your insurance.


Inactive super accounts with low balances will be closed

Many inactive accounts with a balance of less than $6,000 will be closed, and the balance transferred to the Australian Tax Office. The ATO will then use data matching to connect these super accounts with an active account of the member where possible.


Cap on fees for accounts with low balances

Fees will be capped at 3% pa for accounts with $6,000 or less at year end.


Switch funds without paying an exit fee

You’ll be able to switch super funds without paying a penalty as exit fees will be banned.



Pension work bonus going up to $300 per fortnight


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, meaning you’re able to keep more of your income, or work for short periods with little or no effect on your age pension.



Eligible retirees can make super contributions in the first year of retirement


If you’re aged between 65 and 74 and you had less than $300,000 in your super account at the end of the previous financial year, you can still make voluntary contributions to your super in this financial year without needing to satisfy the work test. But you can only take advantage of this once—you won’t be able to make contributions in subsequent financial years. This opportunity is also only available in the year immediately following the year in which you last met the work test.



Super co-contribution scheme threshold changes


If your total income is between $38,564 (up from $37,697) and $53,564 (up from $52,697) during the 2019/20 financial year, and you make an after-tax contribution to your super fund, the federal government will pay you 50 cents for each dollar you contribute to your super fund, up to a maximum of $500.


To be eligible for the co-contribution scheme, you will need to satisfy a work test, be under the age of 71, and have a super balance of less than $1.6 million.



Catch-up concessional contributions allow eligible Australians to put more into super


This is the first year you can make additional catch-up concessional contributions using unused concessional contributions cap amounts from previous years, if you’re eligible.

The ability to make a catch-up concessional contribution applies to people whose total superannuation balance was less than $500,000 on 30 June of the previous financial year.


The five-year carry-forward period started on 1 July 2018 so the 2019-20 financial year is the first one when you can actually make extra concessional contributions using any unused super contribution cap from a prior year.


Work test rules still apply for people aged 65 or over and the usual notice requirements continue to apply for personal deductible contributions. And unused amounts can be carried forward regardless of your total superannuation balance but expire after five years.


Not sure how these changes will affect you?
Get in touch with us! We will be happy to discuss your current situation and how the changes may impact you.

Join us at our MONEY MATTERS SEMINAR!


Get an update on these changes and also the impact of the Federal Election on 18th May at our MONEY MATTERS Seminar:


The Next Step Financial Group Pty Ltd, ABN 50 163 965 946 is an Authorised Representative of Count Financial Limited. ‘Count’ and Count Wealth Accountants are trading names of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count.