exploring the latest changes in superannuation

In a perfect world, important things like pension policies would remain unchanged to keep everyone safe and avoid unnecessary changes.

Superannuation is living proof that such an ideal world does not exist, because ever since it was officially established in 1992, when the mandatory super levy of 3% was introduced, the rules for old-age provision have been constantly tinkered with.

The rules surrounding Super have changed dramatically since then and they promise to keep changing, with a proposal to cap the amount that can be held in retirement accounts only the latest new rule is under consideration.

At various times since Super launched, you’ve been able to withdraw portions of it to help you during the pandemic, invest a whopping $1 million as a one-time contribution, and get back half of your investment in Super as a co-contribution, and even make a portion of it investing in crypto – which brought about a whole new sport of precise market timing.

The one thing a lot of these changes remind us of is that sometimes with Super you have to take the bull by the horns and seize the opportunity because it might not be around forever.

If you were trying to add $1 million to your superstar these days you’d have more tax problems than Alan Bond at his best, but really there was a time when that was not only allowed, it was encouraged.

Change—and opportunity—keeps coming

With that in mind, I thought I’d run through some of the more recent changes to super in case you see an opportunity that might be worth exploring further.

Remember that everyone has their own individual circumstances to consider, so these are not recommendations, just opportunities that may or may not be a good idea for you.

As such, it’s always a good idea to take them to a financial advisor, lawyer, or accountant, if necessary, to make sure they meet your needs.

The other thing to remember is that all of these changes were made by the previous federal government led by Scott Morrison, so there’s a good chance some of these “opportunities” won’t last forever.

keep an eye on posts

The interplay between the super-guarantee amounts paid by your employer and the preferential voluntary contributions you make is a crucial area you need to get right.

The Super Guarantee increased from 10% to 10.5% on July 1, 2022, and is set to increase by 0.5% each year until it reaches 12%.

Currently, the annual contribution cap is $27,500. So it pays to be extra careful and stay under this cap to avoid nasty tax problems.

This is especially true for people sailing close to the cap but potentially accepting a “set and forgotten” amount for voluntary contributions.

This strategy can really fail if the super guarantee increases and effectively uses up a bit more of the annual premium cap available, so this is an area to watch carefully.

Are you entitled to a health card?

With healthcare costs rising, a very big change in Commonwealth Seniors Health Card (CSHC) availability is worth considering, especially for those who may have been retired for some time.

This valuable card is now available to a much larger number of people over the retirement age of 67 – many of whom, even multi-millionaires, would probably never even consider qualifying.

The previous restrictive income threshold above which access to the card was denied has been raised dramatically, increasing eligibility for an estimated 50,000 additional people – assuming they are aware of the change.

Under the old rules, singles and couples could not get a card if they earned more than $57,761 and $92,416 respectively, while the new limits are much more generous at $90,000 for singles and $144,000 for couples.

With no wealth test and the ability to qualify for bulk billing and access cheaper prescriptions at many medical clinics, this is an advantage worth checking out.

The best way to apply for the card is through Centrelink or online.

State energy and transportation rebates and rebates on state fees and charges may also apply if you receive a CSHC.

More super for low-income workers

Another important change worth checking out is that you no longer need to earn at least $450 per month per employer to get the pension guarantee.

This is an important change, particularly for low-income part-time workers, and should hopefully draw many more workers, and women in particular, into the pension system.

If you are over 18 and have previously been impacted by the Threshold, you should take the time to verify that appropriate SG payments are being made to your Super Account.

Time to charge?

Many older workers haven’t enjoyed the Super scheme for much of their working lives, but there are now some good ways to top up on Super.

You used to have to prove you were working to put money into Super, but now that test has been removed for anyone under the age of 75.

There is a $110,000 annual cap on these types of contributions and penalties for exceeding the limit, so make sure you stay between the lines.

Shrink your way to glory

Eligibility for the Downsizer contribution has been reduced to age 55 this year, giving many more people the opportunity to top up their Super from the proceeds of the sale of the family home.

Even better, downsizer contributions don’t count toward your concessionary or non-concessionary contribution caps, and there’s no age limit or requirement to pass the work test.

You can contribute up to $300,000, or $600,000 per couple, provided you have owned the family home for at least 10 years.

It’s a great way to quickly top up super accounts, especially when combined with other posts and also given that you have an expensive house to sell.

Some of the rules in this regard include the deposit, which does not exceed the sale price and is made within 90 days of the change of ownership.

Perhaps surprisingly, you don’t have to spend less than the asking price on the next house, but as you can imagine, this is an area where financial advice is needed because of the large sums involved and the difficulties if you’re wrong must is.

One last check

So there we are, some of the more recent rule changes worth checking out based on the “Grab it while it’s running” rule.

Perhaps the greatest benefit, however, is being able to engage more with your Super, regardless of age, balance, or stage of life.

Make sure you’re in a high-performing, low-cost fund, your risk profile is appropriate, and keep an eye on contributions to make sure they’re being paid correctly and you’re on your way to getting maximum benefit that super can bring.