Q. With the new Financial Year commencing next week, can you please advise what changes have occurred to Superannuation and Allocated Pensions effective 1 July?
A. In the last sitting week of parliament for this financial year, a number of key pieces of legislation were passed that have an immediate impact on Superannuation entitlements and Allocated Pensions benefits.
From 1 July employees will receive an increase in their Superannuation Guarantee (SG) contributions from 9% to 9.25%. The SG rate will incrementally rise to 12% by 1 July 2019.
Employees over age 70 will now also be entitled to Superannuation Guarantee (SG) payments with the removal of the upper age limit for SG payments. Please remind your employer of this change as this one could be easily missed.
Those turning 60 or older in the new financial year, will have access to a higher Concessional Superannuation Contribution Cap of $35,000 for the financial year. This cap is not means tested and applies to all Employer contributions, Salary Sacrifice Contributions and Personal Deductible Contributions. The previous limit was $25,000.
For those with an Allocated Pension, the government has reinstated the higher minimum drawing requirements. Your minimum drawing requirement is based on your age and Pension Account balance at 1 July each year. The minimum drawing requirements from the Allocated Pension in the Financial Year are as follows:
Under 65 4%
Age 65 – 74 5%
Age 75 – 79 6%
Age 80 – 84 7%
Age 85 – 89 9%
Age 90 – 94 11%
Age 95 + 14%
The proposed changes to ban the off market or “in specie” transfers of listed securities were removed from the legislation so individuals can continue to transfer their shares into their Superannuation funds without the requirement to sell and buy on market.