New financial year, new super
The new financial year means changes to your superannuation. So now is the perfect time to run an eye over your super situation.
Compulsory Super Increase
From 1 July 2021, employers will be obligated to increase superannuation guarantee contributions (SGC) from 9.5% to 10%.
If your remuneration package includes super, your take-home pay will drop due to the extra 0.5% being paid to your nominated super fund.
There are annual increases to SGC of 0.5% per year for the next four years scheduled, which means by 1 July 2025, 12% of your salary will be paid to your super fund.
A lot can happen in four years, especially when you mix politics and superannuation, so these increases might be paused or scrapped.
Increased Contribution Caps
The maximum amounts you can add to super each year increases by 10% from 1 July 2021.
Concessional contributions increase to $27,500 per year. This includes contributions from your employer, salary sacrifice and personal contributions where you claim a tax deduction.
Non-concessional contributions increase to $110,000 per year. You can also use the bring-forward rule to make $330,000 in non-concessional contributions at one time. Ensure you check your Total Superannuation Balance (TSB) as there are limits on how much you can add to super.
Compare The Pair
Comparing the performance of your superannuation fund account should become more straightforward from 1 July 2021. For some of us.
As part of the recent Your Future, Your Super laws, the ATO is launching an interactive comparison tool that will rank MySuper products by fees and investment returns.
You will also be prompted to consolidate your super if you have multiple accounts. Reducing multiple accounts is an excellent way to reduce duplicate fees with your super. However, be careful not to cancel any attached insurances you might be better off keeping.
If you’re looking at the performance of your super account and wondering, ‘Can I do better?’, you might be more self driven than most, and it might be time to review your options.
Although not happening until the 1st of November 2021, if you start a new job and don’t nominate a super fund, your employer will pay your superannuation contributions to an existing account.
This change is called ‘stapling’ and will prevent multiple superannuation accounts from being created. Interestingly, 60% of Aussies under 25 have their super with one of just five funds: REST, AustralianSuper, Sunsuper, Hostplus and Cbus.
So unless people actively choose to switch their super funds, the assets of these superannuation funds will continue to grow.
The new financial year also brings changes for self-managed super funds.
SMSFs can now have up to six members, an increase from the previous limit of four. This change is designed for families to more easily pool their super into a larger SMSF. We will explore how six-member SMSFs work in a future article.
It will also be possible for SMSF members to live and work overseas for an extended period of up to five years from 1 July 2021 without tripping the SMSF residency rules.
Commencing 1 October 2021, SMSFs will come under the SuperStream system for rollovers. This means large industry and retail superannuation funds must pay transfer requests to SMSFs within 3 business days. Also, transfers must be made electronically into the SMSFs bank account. No cheques!
There is a catch with these faster transfers. Industry and retail super funds are allowed to request proof of identity documents before approving a transfer. Unfortunately, this means there will still be a bottleneck with most funds while your identity is verified.
StakeSMSF has been created to provide a simple and affordable way for self-directed investors to invest their super directly in the US market, with more investment options being added soon.
Read a deeper investigation into SMSFs specifically on Stake Academy here.