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From 1 July 2021, there are some exciting changes to super including an increase to the Super Guarantee amount and an increase to the super contribution caps.
From 1 July 2021, the Super Guarantee (SG) rate will increase from 9.5% to 10%. This is good news to help you save for retirement.
What is the Super Guarantee?
If you are working, your employer is generally required to contribute to your super fund from your pre-tax salary on your behalf. This is known as the Superannuation Guarantee or SG. Most employees who are aged 18 and above and are earning more than $450 per month are eligible for SG contributions. This applies whether you are full-time, part-time or employed on a casual basis.
What do you need to do?
Generally, you don’t need to do anything. Your employer will arrange the increase with your super fund on your behalf. If you are remunerated on a ‘base plus super’ basis, this will result in an increase to your overall salary. However, if you are on a packaged structure you may need to discuss this with your employer.
In the 2020 Federal budget, the Government announced a series of reforms including the ‘stapling’ of super accounts from 1 July 2021. Please note, this measure has yet to pass Parliament.
If the change is implemented, any future employer will be required to go to the ATO and get details of your ‘stapled’ fund before opening a new default account on your behalf. This means that if you start a new job, your new employer will make contributions into an existing account without you needing to provide them with your super fund details or opening a new account.
More information will be available if and when this measure goes ahead.
On 1 July 2021, the super contribution ‘caps’, or limits, are increasing.
What are the current and new contribution caps?
These increased limits give you the opportunity to increase your super savings and potentially save on tax. For more information on the different types of super contributions and how you can take advantage of the benefits read our article Super news for the new year
For more information on maximising your super refer to the Government’s MoneySmart website.
As part of the Government’s drive to make super more efficient, Eligible Rollover Funds (ERFs) are being closed. ERFs were intended to be a temporary repository for super money that did not have a proper home.
As part of the closure, ERFs will be transferring their accounts to the ATO between 1 June 2021 and 31 January 2022. The ATO will proactively consolidate these benefits to an active super fund. You do not need to do anything, this will happen automatically.
If you wish to consolidate your super refer to our article Consolidate your super and save
If you have any questions on how these changes may affect you, please contact us or your financial adviser. If you don’t have an adviser, we can put you in touch with one.