In the last week several key superannuation measures potentially impacting your super were passed by both Houses of Parliament. These are designed to protect members with small super balances as follows:
1. Insurance for members who are considered ‘inactive’ must not be held unless a member has opted in to retain their cover. An inactive account is one which has not received a contribution or rollover for the past 16 months. Therefore, if you wish to retain insurance on any accounts that are not receiving regular contributions, you must notify your super fund. Once you elect to retain the cover, this election remains indefinitely.
2. A complete ban on exit fees for superannuation funds, effective from 1 July 2019. This lowers the barriers for members to switch their superannuation funds.
3. A cap on fees for members with balances under $6,000 of no more than 3% each year. Further regulations are required to clarify which fees are subject to the cap.
4. Super funds are required to transfer ‘inactive low balance’ accounts to the ATO every 6 months so that those funds can be consolidated with members’ other super. An inactive low balance account has a balance of less than $6,000, no contributions or rollovers received in the last 16 months, no active insurance on the account and no other actions such as changes to the investments, insurances, nominations have been made. This should assist members to keep track of and consolidate their superannuation.
If you have queries about how these changes impact you or should you need to discuss your current superannuation arrangements, please feel free to call LT on (02) 4926 2300 or contact our team.