Positive changes to super
Helping Australians keep more of their retirement savings
The 2018 Budget announced a group of measures aimed at helping Australians consolidate lost super and protecting against certain types of fees and insurance arrangements.
Finding and consolidating super
From 1 July 2018, all inactive super accounts with balances less than $6,000 will be transferred to the Australian Taxation Office (ATO). The ATO will attempt to identify and consolidate inactive accounts with active accounts through data matching.
This will minimise savings being eroded by fees on multiple small accounts – which is often the case with low-income earners, younger people and seasonal workers.
High fees and low account balances are a destructive combination when it comes to super, making it difficult to grow or even maintain savings. Under new proposed rules, passive fees on accounts with balances less than $6,000 will be capped at 3% per annum.
In addition, exit fees on super accounts will be abolished. This will make it easier and more affordable for people to actively choose their own super fund and consolidate multiple accounts.
Changes to insurance arrangements
Insurance through super may not be appropriate for everyone. Like other types of insurance, insurance in super attracts premiums, which are deducted from account balances.
From 1 July 2019, insurance in super will change so that certain groups of people will have to actively choose to take the insurance offered.
These changes are aimed at protecting the retirement savings of young people and those with low balances by ensuring their super is not unnecessarily eroded by premiums on insurance policies they may not need or are not aware of.