The Federal Budget for 2019-20 was released on 2 April 2019.

The Government announced measures that could provide you with more flexibility to boost your super as you near retirement, as well as changes to the insurance automatically provided in super. We’ve summarised the proposals here, and will keep you updated through our website and regular newsletters.

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Work test to be deferred to age 67

The Government is proposing that, from 1 July 2020, members aged 65 and 66 can make voluntary super contributions (both before and after-tax contributions) without having to meet the work test.

Currently, the work test applies from age 65. To meet the work test, you must be gainfully employed for at least 40 hours in a 30-day period. Remember, from 1 July 2019, members aged between 65 and 74 who have a total superannuation balance below $300,000 may be exempt from the work test, if they’re in their first year of retirement.

This new proposal will provide those who are approaching retirement and still working casually or part time, or volunteering, with more flexibility to make extra contributions.

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Extending access to the 'bring-forward rule'

The ‘bring-forward rule’ allows members to make up to three years’ worth of after-tax contributions in a single financial year. This means you could currently make after-tax contributions of up to $300,000 in one year.

Presently, this arrangement is only available to members who were aged 64 or younger at any time in the financial year.

The Government has proposed to extend access to the bring-forward rule for members aged 65 and 66, effective from 1 July 2020.

This could be beneficial to those aged 65 or 66 who would like to boost their super balance as they near retirement.

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Increasing age limit for spouse contributions

If you’re married or in a de facto relationship, currently you can only provide super contributions to your partner’s account if they are 69 or younger.

The Government has proposed to increase the age limit for these spouse contributions to age 74, from 1 July 2020. 

This proposal may be beneficial for couples who wish to equalise their superannuation balances, to maximise each other’s use of a tax-effective pension within the transfer balance cap. The current transfer balance cap is $1.6 million.

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Opt-in insurance for under 25s and members with low balances

The Government is proposing that, from 1 October 2019, insurance automatically provided in super will be switched off for any member who has had a balance of less than $6,000 since 1 July 2019, unless the member chooses to maintain their insurance.

Additionally, from 1 October 2019, new members will not be provided with automatic insurance until they are 25 years old and have a balance of $6,000. However, these members can opt in earlier for insurance if they wish.

Members who do not have automatic cover can apply.

The Government announced similar measures in the 2018-19 Federal Budget. However, the final legislation related to that budget measure did not include these proposals.

Questions and Answers

Yes, contribution caps will apply regardless of work test exemption status. Individuals, however, may also access unused concessional contribution caps to contribute more than $25,000 under existing concessional cap carry forward rules during the 12-month work test exemption period.
Currently, this rule can be used by members who are 64 or younger at any time in the financial year. The Government is proposing to extend this to people aged 65 and 66 from 1 July 2020.
You may make spouse contributions up to your spouse’s after-tax contribution cap. For more information about spouse contributions, please click here.
The transfer balance cap (the limit on the total amount of super that can be transferred into retirement income products is currently $1.6 million). This amount is indexed periodically in $100,000 increments in line with inflation.
You can check your insurance cover on the Rest App or go to MemberAccess. We’ll let you know about the proposals included in this year’s Federal Budget when the Government releases further details.

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