There are four superannuation changes that came into force on July 1st and whilst none of them may affect your super, you need to make sure, just in case. Each of these changes is designed to prevent your super from being eroded, which for some people will make a big difference to their balance. Let’s take a look at each of these changes one by one.
1. Your insurance might be cancelled
If you haven’t made any contributions to your super for 16 months or more, any insurance attached to your super will be cancelled. This change can apply to many retirees or sole traders who no longer make super contributions. This change is designed to prevent people paying unknowingly for multiple insurances on multiple super funds, so it saves you money.
If you only have one super fund but haven’t made any contributions for at least 16 months, you need to inform your fund if you want to keep the insurance policy; if you have multiple super funds, you need to decide quickly which of the insurance policies you want to keep (if any) and inform your fund.
It’s important to decide whether you want to keep one of these insurance policies, and if so, which one. Insurance depends on many different life factors, one of which is – what does the policy actually cover? However, if you already have an insurance policy separate to your superannuation, you may simply want to let the super insurance lapse.
2. Super fees capped
If your super balance is less than $6000 at the end of the year, you can end up spending a lot of that money in administration fees. So this change caps the fees you can be charged by your fund to 3% of the balance, saving you money on your super.
3. Inactive accounts transferred to the ATO
If you account has less than a $6000 balance and has been inactive for at least 16 months (meaning you haven’t made any contributions to your fund), the balance will be transferred to the ATO. This change is designed to prevent people from having multiple inactive super accounts that eat up their fees; rolling them all into one account is a much better strategy.
The ATO will search for your active super account and roll the balance of your inactive accounts into it, unless you don’t have an active account. In this case, the ATO will retain your super balance, until you notice it’s gone missing!
4. Exit fees have been terminated
If you want to leave your super fund, there will no longer be any exit fees charged for terminating your account. This change is designed to make it easier and more financially viable for people to move their balances from one fund to another without paying an exit fee that some see as a penalty.
If you are concerned by any of these changes or you are still confused and unsure what to do, call me (Amanda McCall) on 07 3356 6929 or book your appointment online.