Superannuation changes

[Andrew Williams]

Just a quick update on some superannuation changes.


Superannuation – Maximum age for Superannuation Guarantee

The age limit for employees eligible to receive superannuation guarantee contributions is to be removed entirely effective from 1 July 2013.
Originally it was proposed to increase the age limit from 70 to 75, however the age limit will now be removed entirely.

As an aside, a superannuation fund can currently only accept contributions in respect of members who are aged under 75 (between 65 and 75, the work test must be met), unless the contribution is a “mandated employer contributions”. As SG contributions are mandated employer contributions, current superannuation legislation will allow for SG contributions to be made for people over 75.
However, unless the legislation is amended to increase the age limit at which superannuation funds can accept non-mandated employer contributions, it is unlikely that other employer contributions including those made under a salary sacrifice arrangement will be able to be made for those aged 75 and over.


Superannuation – Indexation of the concessional contribution caps

Currently the concessional contribution cap of $ 25,000 is indexed in $ 5,000 increments in accordance with the movement in Average Weekly Ordinary Times Earnings (AWOTE). When the concessional contribution cap was halved effective from 1 July 2009, the indexation base was reset.

The Government has announced that indexation will be paused for the 2013-14 financial year, thereby potentially deferring the increase of the concessional contribution cap to $ 30,000 by one year.


Superannuation – Account based pensions – minimum annual drawdown

The current 25% discount applying to the minimum drawdown required to be made from account based pensions will be continued for the 2012-13 financial year. This discount applies to all account based pensions including market linked income streams (term allocated pensions).


Superannuation Co-contribution – reduction

The Government co-contribution currently available to low income earners is to be further reduced from 1 July 2012. The matching rate (currently $ 1 for $ 1) will be reduced by 50% with the maximum co-contribution being $ 500 for people with incomes of up to $ 31,920. The co-contribution will phase out when income reaches $ 46,920.


Superannuation – low income superannuation contributions

The criteria surrounding eligibility to the low income superannuation contribution (refund of contributions tax for people earning less than $ 37,000) has been modified. The LISC will only be payable for individuals who derive 10% or more of their income from employment or for carrying on a business.


Regards

Andy

[lynsteve]

am i right in saying i can access my super at aged 55..if born before????

stevo

[Andrew Williams]

Stevo,

It may be possible for people to access Super monies at what is known as preservation age currently age 55, this is changing as per the table below.

Date of birth	Preservation age
Before 1 July 1960	55
1 July 1960 - 30 June 1961	56
1 July 1961 - 30 June 1962	57
1 July 1962 - 30 June 1963	58
1 July 1963 - 30 June 1964	59
From 1 July 1964	60

However if under age 65 generally a further condition of release must be met for someone to be able to access the full amount.

Although it may be possible for someone who has reached preservation age and is still working to access some of their funds but this would have to be done via what is known as a non-commutable pension which allows access of up to a maximum of 10% of their balance each financial year.

If access is allowable then depending on the age of the person and the breakdown of the different components within the Super this money may or may not be taxable.

This can be a pretty complex area so seeking financial advice is recommended.

Andy

[essess]

My hubby (a born n bred Aussie) paid into AusSuper for many years whilst he lived in Australia. He is now living in the UK and has become a British Citizen, and has no intention of returning to Australia lo live and work. He is employed in the UK and paying into a British pension scheme. We have been told that he will be entitled to a british state pension because years worked in Australia will count towards the "stamps" needed to qualifyhere in the UK, but we are at a loss to understand when he will be able to access his Australian super, despite contacting them by phone, email and letter. He has a substantial amount to draw on retiring. When do you think he will be able to access his Aussie super? He is 46 now. Thankyou

[lynsteve]

i was born in 58 so i should be able to access it correct

stevo

[Andrew Williams]

i was born in 58 so i should be able to access it correct

stevo

Steve

Access to the money as long as the correct process is followed should be (assuming you do not have a defined benefits scheme) possible as you have met preservation age.

Whether it be a limited amount or the full balance will be dependant on your work situation.



Andy

[Andrew Williams]

My hubby (a born n bred Aussie) paid into AusSuper for many years whilst he lived in Australia. He is now living in the UK and has become a British Citizen, and has no intention of returning to Australia lo live and work. He is employed in the UK and paying into a British pension scheme. We have been told that he will be entitled to a british state pension because years worked in Australia will count towards the "stamps" needed to qualifyhere in the UK, but we are at a loss to understand when he will be able to access his Australian super, despite contacting them by phone, email and letter. He has a substantial amount to draw on retiring. When do you think he will be able to access his Aussie super? He is 46 now. Thankyou

Hi Essess

I will PM you as I will need to ask some personal details.

Regards

Andy