Superannuation changes looming: try these six on for size

Superannuation is many Australians’ biggest asset outside their family home and is constantly tweaked. Here's what’s coming soon, and also what should be coming.

Psst! Did you know there’s election coming soon? And also a federal budget?

That means our brains are about to be peppered with piles of promises, law changes, statistics and sales pitches.

Superannuation is constantly tweaked by politicians, and I can’t remember the last federal budget without a super change.

But we’re lucky to live in a country with one of the biggest and best retirement savings systems on the planet. And many super moves are positive – as we saw with legislation passed last week that particularly helps women and retirees.

Some big changes to superannuation are now locked in, while others remain on the wish lists of super sector groups. Here are six examples of either what’s coming or what should be coming soon.

GIVING PART-TIMERS A GO

From July 1 the government will remove the $450 monthly income threshold that workers need to earn before they’re eligible for compulsory employer super contributions.

This has been widely welcomed by the super industry and is estimated to help about 300,000 Australians, mostly women.

FLEXIBILITY FOR SENIORS

Other legislation passed last week removes the work test that previously stopped people aged 67-to-74 from contributing to super unless they were employed.

Another law change lowers the age threshold for the super downsizer scheme from 65 to 60, allowing more older Aussies to sell family homes and pump much of the proceeds into super.

MORE HELP FOR WOMEN NEEDED

Women are still way behind men in average super balances, with men at $162,000 and women at $128,000 according to the latest ATO data.

In its submission ahead of the March federal budget, The Association of Superannuation Funds of Australia (ASFA) has called for a $5000 super baby bonus to be paid directly into the super account of anyone who gives birth to a child or is its primary carer.

The value of the nation’s superannuation savings has climbed above $3.4 trillion.

The Australian Institute of Superannuation Trustees (AIST) wants superannuation extended to paid parental leave.

GOING TO 12 PER CENT

Politicians previously legislated the gradual increase in compulsory super to 12 per cent by 2025, up from today’s 10 per cent, even though some conservative MPs hate it because they think industry super funds are a Labor honey pot.

But you won’t see the Coalition flagging changes to the legislated rises in the lead-up to the election, because it doesn’t want to slap a target on its back.

The superannuation guarantee rises to 10.5 per cent on July 1.

REDUCE TAX BREAKS FOR THE RICH

Wealthy super fund members can only hold $1.7 million each (poor things!) in a tax-free account-based pension, but are still allowed to stash unlimited amounts in general superannuation where the tax rate is 15 per cent rather than the 45 per cent they potentially pay outside of super.

ASFA and AIST have both called for rule changes for people with super balances of more than $5 million to require them to withdraw the excess from superannuation. That seems fair, I reckon.

If you’ve got $5 million each in a low-tax super environment, you’re getting huge tax breaks anyway.

REIN IN BAD BOSSES

Employers are legally required to pay super four times a year, but many pay late and some don’t pay at all.

Super Consumers Australia says an estimated $2.5 billion is unpaid, and it wants people’s super to be paid at the same time as their wages. “People can go for months without realising there is a problem and by the time they act a business may have gone insolvent,” it says.

Originally published as Superannuation changes looming: try these six on for size