There are a number of superannuation changes that will take effect on the 1st July 2021. We share the key changes below.
Here are the recently passed super bills
Your Super, Your Future
More Flexible Superannuation Bill
Self-Managed Superannuation Funds Bill
Your Super, Your Future was passed by the Senate on the 17th June 2021, and is a bill that will be most impactful for younger members. Consider that when you setup your very first superannuation fund, going forward, that fund will in effect be stapled to you and as you change jobs it will move with you. There are pros and cons with this change as stapling will help reduce multiple accounts, however it can tie a member to an underperforming fund.
The government’s More Flexible Superannuation Bill was also passed through Senate on the 17th June and will allow people aged 65 to 66 to bring forward up to three years of non-concessional super contributions under the “bring-forward rule”.
This bill was passed with amendments that include the following higher concessional contributions for individuals aged 65 and over:
The cap for concessional contributions will increase from $25,000 to $27,500
The cap for non-concessional contributions will increase from $100,000 to $110,000
The third bill that was passed was the Self-Managed Superannuation Funds Bill that allows the increase of members in self-managed and small APRA funds from four to six. Outside of that a number of changes have started to flow into the system, including;
Superannuation guarantee increase to 10%
The superannuation guarantee is the minimum percentage of your ordinary time earnings that your employer has to pay into your superannuation fund, if you meet certain conditions. On the 1st of July 2021, the superannuation guarantee will increase from 9.5% to 10% and will continue to increase by 0.5% annually until it reaches 12.0%.
General transfer balance increase
The transfer balance cap is the maximum total amount of superannuation that can be transferred into the retirement phase. If you have more than one super account, the combined balances are used to calculate this amount. On the 1st July 2021, the general transfer balance cap will also increase from $1.6 to $1.7 million.
Pension transfer balance cap (TBC)
Individuals who start their first retirement phase income stream on or after 1 July 2021 will have a tax exempt retirement income stream of $1.7 million. A proportionate rule will apply if a person has previously triggered their TBC before indexation on 1 July 2021.
If a person did not utilise the entire $1.6 million cap, indexation will be a proportion of the amount remaining against their cap (as a percentage of the $100,000 indexed amount).
If a person has fully utilised $1.6 million TBC before indexation on 1 July 2021, their personal cap remains at $1.6 million. That is, no indexation applies.
