Revamped First Home Super Saver scheme gives buyers earlier access to cash
Among all the budget and election noise in April, federal parliament passed new laws that aim to improve superannuation member outcomes, including implementation of two recommendations from the banking royal commission.
One of the most important was an amendment to the First Home Super Saver Scheme (FHSSS).
The new legislation means individuals can enter a contract to buy or build their first home at an earlier time and still have access to the scheme rather than waiting for funds to be released from their super.
They must have applied for and received a FHSSS determination and applied for their super release within 14 days of entering the contract.
What will come as a relief to some first home buyers is that the new law is being retrospectively applied from July 1, 2018.
This means "individuals who have a determination, made a valid request for release from the commissioner and enter into a contract to purchase or construct their home on or after July 1, 2018 will satisfy the requirements of the First Home Super Saver Scheme".
Other conditions include: The price for the purchase or construction of the premises is at least equal to the amount requested for release; the individual has occupied the premises, or intends to occupy it as soon as practicable; and the individual intends to occupy the premises for at least six of the first 12 months that it is practicable to occupy the premises.
Aside from the FHSSS, the legislation also implements two recommendations of the banking royal commission.
It bans super funds from inducing employers and extends civil penalties to super fund trustees - in addition to civil and criminal penalties for directors - for breach of their best-interests duty.
APRA's regulatory powers have also been given a boost to take preventive or corrective action where a super fund is not acting in the best interests of members.
APRA also has more power over the authorisation process for default MySuper products.
Finally, the government is making super funds more accountable for how they spend members' money through new expense reporting methods, annual members' meetings and an improved portfolio disclosure regime.
These are sensible changes and hopefully they restore more trust in banks and super funds and align with parliament's original intentions.
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