September 19th, 2019
In February 2019, the Federal Government passed legislation to support the Protecting Your Super Package introduced in the 2018/19 Budget. Some of these changes took effect on 1 July 2019 and may impact your employees.
The Protecting Your Super Package introduces several measures that are designed to ensure that members’ super balances are not eroded by unnecessary fees and charges.
The new law requires all super funds to take action in three areas:
- to cancel a member’s default insurance when their account has been inactive for more than 16 months – the first group of affected members had their cover switched off on 1 July 2019;
- to protect low balance super accounts by setting a limit on the fees that can be deducted each year; and
- to transfer inactive accounts below $6,000 to the Australian Taxation Office (ATO) to enable multiple accounts that a member may hold to be combined with their main account – the first group of members will be transferred to the ATO on 31 October 2019, and thereafter on 30 April and 31 October each year.
Importantly, the new legislation does not take into account whether cancelling a member’s insurance or whether transferring their low-balance super account to the ATO best suits an individual’s circumstances. You can learn more on our dedicated Protecting Your Super web page.
This legislation has had some effect on First Super’s group insurance arrangement, which has resulted in changes to the fees members pay for their insurance inside super. Separately, the ATO has also updated its Work Test and Work Test Exemption (WTE) rules, which affect super fund members aged 65 to 74.
You can find more details on these updates and how they may impact your employees on our most recent Significant Event Notice available from our Fund Statements web page.