An update on the Royal Commission and some recent superannuation legislation changes.
The Royal Commission
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recently released its Final Report. The report made 76 recommendations and both major political parties have said they will support the recommendations.
We also support the report’s recommendations because we believe they will improve Australia’s financial services industry for the benefit of all Australians. We are already implementing many of the super related recommendations and are working constructively with industry regulators on the other recommendations.
Recent changes to super
New legislation has been passed by Parliament which is designed to protect people’s super. Many of the new measures were part of the 2018/19 Federal Budget’s ‘Protecting Your Super Package’ and relate to fees, lost member accounts and insurance arrangements. Other measures were recommendations from the recent Royal Commission report.
What are the changes?
Some of the recent changes include:
Capped fees and low balance accounts
- From 1 July 2019, when you exit a super fund you will no longer be charged an exit fee.
- From 1 July 2019, if your super balance is under $6,000 there will be a cap placed on fees limiting them to no more than 3% per year.
- Super funds are required to transfer ‘inactive low balance’ accounts to the Australian Taxation Office (ATO) every six months. The ATO is now also responsible, where possible, for consolidating this money with the person’s other active super account or to their Estate if they have passed away. An inactive low balance account is now broadly defined as an account of under $6,000 where no activity has occurred in the last 16 months. This includes no contributions made to the account in the last 16 months and where there is no active insurance on the account. Other new definitions apply.
To check if you have any lost super log in to your account and click on the ‘Start your super search’ button under ‘Find and consolidate your super’.
Changes to insurance
If you have an account that is considered ‘inactive’ insurance must not continue unless you specifically opt in to retain your insurance cover. An inactive account is one that has not received a contribution (including a rollover) for the past 16 months.
As new regulations are passed we will keep you informed regarding the details of the changes and how they affect you.
If you have any questions, please contact your financial adviser. If you don’t have a financial adviser, please contact us and we will put you in touch with one.