A super start to the year
The 2021 budget saw quite a few changes to Superannuation come into effect, aimed at delivering better results for more members. In particular, women and those in part-time and casual employment will benefit from these changes.
So what are the Super changes and how will they affect you?
All the below proposed changes are due to come into effect on 1st July, 2022 however still need to pass Parliament.
2021 Federal Budget Changes to Superannuation for Workers
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Increase to Super contribution caps
You will now be able to contribute more to your Super with the annual concessional contribution cap increasing from $25,000 to $27,500, the first time since 2017.
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Removal of $450 monthly income threshold for super contributions
This is of great benefit to those who work in casual or part-time positions who may not have met the minimum income threshold to receive super payments. Now, no matter how much you earn, employees are entitled to receive super contributions from their employer. Previously, a threshold of $450 a month needed to be met to receive benefits. Lifting this threshold will entitle an additional 300,000 workers to super payments. Over 60% of these workers are female.
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Increase in the withdrawal limit for First Home Super Saver Scheme (FHSSS)
The First Home Super Saver Scheme allows those saving for a home to make voluntary post-tax contributions to their super to a cap of $15,000 a year. The maximum withdrawal from the scheme will be increased from $30,000 to $50,000 – or $100,000 for couples.
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Removal of super contribution ‘work test’ for those aged between 67 and 74
The work test for those between 67 and 74 years will be abolished from the start of July. The current work test states those need to be employed for at least 40 hours in a consecutive 30 day period. This will non longer apply, excluding where personal deductible contributions are made.
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Transfer of unclaimed super to KiwiSaver accounts
The Australian Government will commit $11 million over four years, then $1 million every year after that, of unclaimed super direct to New Zealand Superannuation funds.
2021 Federal Budget Changes to Superannuation for Retirees
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Lower age threshold for super downsizer scheme
The age for downsized contributions (up to $300,000 per person following the sale of the family home) will be reduced from 65 to 60. This may in turn affect eligibility for the Age Pension.
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Legacy product conversions
The Government will allow individuals to exit specified legacy retirement products to transition to more flexible and contemporary retirement products.
If you would like to discuss your Superannuation and how these changes may affect you, get in touch with our team for a comprehensive Super review.
