The Government has announced that the reduced minimum drawdown for income stream members has been furthered extended to 30 June 2011.

Under Legislation, minimum payments must be made from super-based pensions or income streams at least annually. The minimum is set by the member’s age and account balance each July.

Due to the GFC, a 50% reduction in drawdown minimums has been in place since 2009. This reduction was due to end in June but has now been extended another year to assist income stream members rebuild after capital losses which occured while the market was low.

AvSuper members who have already requested drawdowns based on the reduced minimum will automatically continue on that level. Annual income stream drawdown letters will explain how all eligible members can access this reduction for 2010/11.

On 2 May, the Government released the Henry Tax  Review report along with its recommendations. As well as replying to the Review’s recommendations , the Government announced the following superannuation reforms:

• The maximum age for the Superannuation Guarantee (SG) is to increase from 70 to 75 from 1 July 2013

• The SG rate will gradually increase to 12% (this was not in the Henry Review recommendations): (more…)

The Ripoll Inquiry, established because of recent financial product and service provider collapses, reviewed the role played by commission arrangements for product sales and advice, the potential for conflicts of interest and the need for appropriate disclosure and remuneration models for financial advisers.

The focus of the Inquiry was on non-superannuation products and services, but its recommendations may have flow-on effects for super fund members in the future. (more…)

As we previously advised to members, the 2009 Federal Budget included some changes regarding super contributions.

The relevant legislation has now been passed, with the Tax Laws Amendment (2009 Budget Measures No.1) Act 2009 receiving Royal Assent.

This means that from 1 July 2009,

• Concessional contributions caps are reduced to $25,000 (or a transitional limit of $50,000 if you are over 50) per year from 1 July 2009. If you have a DB account at 12 May 2009 and don’t increase your contribution rate, provisions have been made to protect you from excess tax on notional employer contributions.
• Non-concessional contributions caps will not be indexed (i.e. increased) on 1 July 2009 but will stay at $150,000 (or $450,000 over 3 years).
• The co-contribution will match up to $1,000 of personal contributions for eligible people. This rate reduction is temporary and will increase again from 2013
• Income stream members can withdraw half of their projected annual drawdown minimum until 30 June 2010

Also note that from 1 July 2009, your salary sacrifice super contributions will now count towards your assessable income for means test purposes for some Government payments and benefits, including the super co-contribution, family assistance payments, child support payments and seniors card eligibility.

In last month’s Federal Budget, it was proposed* that contributions caps for concessional contributions will be reduced from 1 July 2009. Contributions made to AvSuper before 30 June 2009 are not affected by these changes.

The reduced caps will affect your concessional contributions and, if legislated, will mean you may be required to pay additional tax on contributions above the caps if the sum of any salary sacrifice amounts and your employer contributions is more than $25,000 p.a. (or $50,000 p.a. if you are over 50). (more…)

We often get questions about self managed super funds (SMSFs) and while SMSFs may be great for some people, they won’t suit everyone. Your super is an investment for your retirement; even the Australian Securities and Investment Commission (ASIC) recommends you ‘look before you leap into a SMSF’.

Being in control of your super may look appealing, however the terms ‘self managed’ and ‘do-it-yourself’ super are possibly misleading. Operating a self-managed super fund is complex, and usually requires professional assistance, time and money.

Our new Managing your own super fact sheet includes some questions you may want to consider before deciding on a SMSF.

Superannuation is a long term investment, but that doesn’t stop the emotional response to seeing your investments fall.

A report from The Superannuation Stakeholder Group* outlines the affects of the global crisis on Australian superannuation. The report shows the volatility and market fall over the last 12 months. (more…)

As we indicated in our June 2008 bulletin, the Government has made changes to super for temporary residents. Temporary residents qualify for and earn super the same way as other Australians, although they are not entitled to the Government co-contribution.

From 1 April 2009, departing Australia superannuation payments (DASP) will be taxed at 35% (for the taxed element of the taxable component), increasing from the current rate of 30%. If you are a temporary resident, you can apply for a DASP before leaving Australia but won’t be paid until after you leave the country or your visa has expired or been cancelled.

Under new legislation, AvSuper now recognises same-sex partners and their children for death benefit and family law purposes.
The new definition of spouse includes “another person who, although not legally married to [the member], lives with [the member] on a genuine domestic basis in a relationship as a couple.”

Couples in a de facto relationship, including same-sex couples, will now be recognised for superannuation splitting purposes under Family Law legislation. Same-sex couples will also be recognised for spouse contribution and contribution splitting purposes.

These changes are an important step forward for the families and beneficiaries of same-sex couples, although not all super funds will be easily able to implement the new rules. Fortunately, AvSuper has previously recognised same-sex partners for superannuation death benefit purposes, under the definition of interdependent relationship.

There is no doubt that financial markets across the world are undergoing a lot of change and stress this year. Just recently, for instance, the US Federal Reserve has agreed to loan money to the AIG insurance group and the Lehman Brothers investment bank has recently filed for bankruptcy.  Unfortunately, it is possible that these changes and movements will continue for some months to come. (more…)