Several measures aimed at increasing the flexibility of super appear in the 2021 Federal Budget, but the industry will be most pleased about the absence of a freezing of the Superannuation Guarantee (SG) rate and the axing of the low income threshold.
It was a quieter year of announcements, compared to 2020’s far-reaching Your Future, Your Super package. Here are the highlights:
The $450 per month earnings threshold for SG will be abolished, expanding super cover to around 300,000 individuals whose earnings are currently too low to qualify. This long overdue measure will improve superannuation savings, particularly for lower income and “gig” workers.
The absence of any announcement on the SG level indicates that the legislated increase to 10% will go ahead on 1 July 2021.
Measures were announced under the heading of “flexible super” and include the abolition of the work test for Australians aged 67-74 for non-concessional and salary sacrifice contributions. The other measure is a lowering of the eligibility age for the downsizer contribution.
First Home buyers will be able to access $50,000 from their voluntary contributions to super (up from $30,000), and there have also been some technical changes to the First Home Super Saver Scheme.
Several changes to SMSFs, around residency requirements and the ability to exit a specified range of legacy retirement products. The latter will be welcomed by affected individuals.
Changes to the Pension Loans Scheme around lump sum advances and a “no negative equity” guarantee are designed to improve the scheme’s uptake, enhancing its visibility and utility.
APRA and Super Consumers Australia will receive additional funding, partly met through an increase in levies.
The Women’s Budget Statement reiterated the government’s announcement from 2018 to build an electronic data information sharing mechanism between the ATO and Family Court, to allow quick identification of superannuation assets during court proceedings. Legislation on this will be introduced shortly.