Changes to Superannuation Legislation
On 1 July 2019, The Federal Government’s Protecting Your Super Package Act comes into effect. This package is designed to protect Australian’s retirement savings from being depleted by unnecessary fees and insurance premiums.
Changes to Fees
From 1 July 2019, Superannuation accounts with balances of less than $6,000 will have a maximum administration and investment fee cap equal to 3.00% per annum. Additionally, all exit fees on superannuation funds will be banned entirely, this includes any fees for partial rollovers or withdrawals. This will allow and encourage consumers to ‘shop around’ and find the best deal on where they house their retirement savings.
Inactive Superannuation Accounts
Inactive Superannuation accounts with balances of less than $6,000 will be transferred to the ATO from 1 July 2019. An account will be deemed inactive if there has been no contributions made over the previous 16 months. The ATO will hold onto the funds at no cost and transfer it and any associated earnings to an active superannuation fund. This is designed to stop superannuation funds from becoming ‘lost’ accounts or being eroded by minimum fees and charges.
Changes to Insurance
Historically, some superannuation funds have automatically set up age and income based level of insurance cover when you open a new fund. As such, many people either have cover that they are unaware of or that they do not necessarily need. From 1 July 2019, any insurance held within an inactive superannuation fund, that is a fund with no contributions over the last 16 months, will have their insurances cancelled unless otherwise advised by the member.
If you have received communication from your superannuation fund informing you that your superannuation benefits will be transferred to the ATO or that your insurances will be cancelled and you are not sure what to do, please do not hesitate to contact our office, where we can assist you further.
Brealey Quill Kenny discuss Protecting your Super Package