What the July 1 super changes mean for you
All employees will receive 0.5% more as their superannuation guarantee lifts to 10.5% of their salary from July 1, up from 10%.
The biggest winners will be employees on award wages or enterprise agreements negotiated by a union because the superannuation will be paid on top of their wage. For example, an employee on a wage who is paid $80,000 plus superannuation is currently receiving $8000 into their superannuation but from July 1, they will be paid $8,400 into superannuation.
Not so fortunate are employees on contracts or individually negotiated arrangements who receive superannuation as part of their salary package. The additional 0.5% will be taken from their salary and their annual wage will decrease.
Other changes to superannuation to help pump up your retirement savings include:
$450 threshold for super is ditched
Over 300,000 low-paid, part-time, mostly young Australians will be paid superannuation for the first time from July 1.
Anyone earning less than $450 per month before tax or in multiple low-paid jobs will be receiving the superannuation guarantee - a 10.5% contribution - from their employer under the new changes. This affects 3% of the workforce and two-thirds are women.
"It is good that they will be covered," explains Andrew Yee, director of superannuation at HLB Mann Judd.
"Employees need to be aware that they should be receiving superannuation and monitor payments from July 1," explains Yee.
Employers are supposed to set up their employees' superannuation arrangements, but some are not up to date with changes or are unscrupulous says Yee.
If you don't have a superannuation fund, it is time to choose a good one when your employer asks you if you wish to select a fund or go with the employer default superannuation fund. Visit APRA's MySuper heatmap to compare different superannuation funds' performance and administration charges. apra.gov.au/mysuper-product-heatmap
You want consistent, strong performance per annum and low administration charges. Thirteen superannuation funds failed APRA's test, and you certainly don't want to join those funds.
Use $50,000 of your super to buy your first home
Under the First Home Super Scheme (FHSSS) eligible individuals will have access to an extra $20,000 of voluntary contributions to fund a home deposit.
From July 1, 2022, you will be able to contribute, and access for your first home, up to $50,000 in total voluntary contributions, up from $30,000 in voluntary contributions last financial year.
"Your fund needs to offer the first home super saver scheme. Check with your fund," says Yee. "If your fund doesn't offer it, change to a fund that does."
Yee says some parents are helping their adult children into the property market by contributing to their super fund.
These contributions must be within existing contribution caps of $27,500 per year concessional contributions cap.
Work test scrapped for older Australians
Retirees aged between 67 and 74 can top up their superannuation without having to satisfy any test, provided their superannuation is less than $1.7 million in July 2022.
"It is really opening up for elderly people who want to move money into superannuation. They can make year-on-year annual contributions," says Yee.
The work test that specified you had to be employed for at least 40 hours in a consecutive 30-day period, finished on June 30, making it simpler for retirees to contribute. Yee says retirees who were taking part-time jobs to put money into superannuation, no longer have to do this.
You can also receive the government's superannuation co-contribution after you are 67.
As well you can make a voluntary payment to your partner's superannuation through a spouse contribution.
Using the bring-forward provisions, you can move up to $300,000 into your younger spouse's super account. It can increase your eligibility for the age pension as well as the valuable concession cards such as the Pensioner Concession Health Card under the assets test until the younger spouse reaches age pension age.
"Couples can even out their superannuation to make it more tax effective," says Yee.
Downsizers can sell at 60
You can tap into some of the capital in your home by selling your home, moving to a cheaper one and contributing up to $300,000 for each member of a couple into superannuation.
From July 1, the eligibility for downsizer contributions is lowered from age 65 to 60.
But watch out how it affects your eligibility for the age pension. The taper rate can mean that more in superannuation means you won't get much age pension.
"Self-funded retirees can take advantage if they are not worried about social security tests. They can top up their superannuation," says Yee.
The cut off age to bring forward non-concessional contributions lifts from 67 to 75. This allows you to place $110,000 per year for three years of non-concessional contributions up to $330,000.
This means that if you are 74 on July 1, 2022, and you have less than $1.35 million in your super, you may be able to boost your retirement savings by adding $330,000 non-concessional contributions.
Home Equity Access Scheme
The government runs a reverse mortgage, formerly called the Pension Loan Scheme (PLS) that has been renamed the Home Equity Access Scheme (HEAS). It is designed to help boost the retirement income of eligible age pensioners by unlocking money in the home.
HEAS has been revamped and offers an increased drawdown of 150% of the age pension. It can be paid out as regular payments and from July 1 this year, a lump sum advance of up to 12 months payments of up to 50% of the full annual age pension - $19,355 for couples and $12,838 for singles. The amount advanced is then repaid by reducing the next 26 fortnights or one of HEAS payments, explains Paul Rogan, CEO of Pension Boost, a private company that helps retirees access the Government's HEAS for a fee.
The government has introduced a no negative equity guarantee for HEAS loans so that retirees will not owe more than the market value of their property, in the rare circumstances where their accrued HEAS debt exceeds their property value.
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