On Tuesday 2 April, the Federal Government released their 2019-20 Budget.
There were few superannuation changes, but we’ve summarised the main proposals affecting AvSuper’s members below, and provided some thoughts on how we believe the measures may apply in practice, should they become law.
With a federal election expected to be called any day, the progress of these proposals and measures would appear to depend on the outcome of the federal election. As always, we will keep members updated as and when legislation occurs.
— BUILDING SUPER WHEN OVER 65 —
From 1 July 2020, eligibility to make additional voluntary contributions without needing to meet the “work test” will include 65 and 66 year olds.
Members aged 65 and 66 will also be given access to the bring forward arrangements, which currently allow members under 65 to make up to three year’s worth (ie up to $300,000) of non-concessional contributions in one year.
In addition, spouse contribution age limits will increase from 69 to 74 years.
— AvSuper comment on building super —
These are small but sensible measures that will enable older members to continue building their super.
AvSuper members seeking to take advantage of the new contribution rules will however need to also remember that there have been no changes to the contribution caps or the maximum transfer balance cap (for new income streams).
— Opt-in insurance – confirmation —
The Government confirmed its intention to legislate new opt-in insurance rules for new members under 25 and/or with an account balance below $6,000.
However, if this proposal is legislated, the start date is delayed until 1 October 2019.
— AvSuper comment on opt-in insurance —
We’ve been watching this proposal for some weeks and much remains unclear. While younger members and low account balance holders will no longer receive automatic insurance upon joining AvSuper under this proposal, and will have to specifically opt-in for such insurance, it remains unclear how this would apply in practice. We will write to those AvSuper members likely to be affected by this proposal as more information is known.
In late February 2019, the Federal Government legislated several small changes affecting super. These changes are to take effect from 1 July 2019, although we do not expect the changes to significantly affect the majority of AvSuper members.
Inactive members – insurance will cease
|Effective from 1 July 2019, the Government requires that your insurance (death and/or disability) arrangements must cease after 16 months of “inactivity”, unless you confirm to us in writing that you wish to retain that insurance. Inactive is defined (for this measure) as 16 months without contributions of any kind.
We will be required to confirm with you at various intervals of inactivity to confirm if you wish to retain your insurance. If we do not hear from you within the 16 months, then we will cease deducting insurance premiums from your account, and your insurance cover will be cancelled at the end of the notification period.
AvSuper Comment: We recognise that many of our members value their insurance, even if they are not working and not receiving contributions for a period of time, and we will be in touch with members likely to be affected by this change in the coming weeks.
It is important to note that if your insurance is cancelled, you may not be eligible for automatic cover in future so if you subsequently require insurance cover, you may be subject to underwriting requirements and/or limitations until qualifying periods are met.
Capping superannuation fees
|Effective from 1 July 2019, superannuation fees will be capped at 3% per annum of your account balance, if your balance is less than $6,000. The new laws mean the Trustee will refund fees above the 3% cap, which will be calculated based on your account balance as at 30 June each year, or upon exiting the Fund.|
AvSuper Comment: In practice, this will likely only affect a small number of AvSuper members – namely those with account balances of approximately $3,200 or less.
Removal of exit fees
|Exit fees will also be prohibited from 1 July 2019. Since AvSuper does not charge exit fees, this change will not affect our members.|
AvSuper Comment: Those members with other super fund accounts who have not been able to consolidate their balances into AvSuper because of high exit fees in their other fund, may now want to review their situation and see if a rollover to AvSuper will now be possible.
I am very pleased to announce that Nic Miners joined our team as a Member Advice Consultant on 16 January 2019.
With a Masters of Applied Finance (Financial Planning), Nic has been working in the superannuation and financial advice industry since 2015 and has gained a high-level of technical knowledge and skill within superannuation through both his study and employment experience.
As part of our Member Services Team, Nic is available to provide support to members in order to assist members in achieving their desired financial outcomes.
To welcome Nic or ask any questions about your AvSuper account or superannuation, please contact your AvSuper team on 1300 128 751 or AvChat (see link above).
Chief Executive Officer
I am delighted to announce that Ben Firkins has been elected as Chair of the AvSuper Board of Trustees.
Ben will take over as Chair from George Fishlock effective today, 1 February 2019, following the retirement of George Fishlock after 19 years of service to the Fund.
Ben works in Perth as an aviation safety auditor, specialising in the carriage of dangerous goods on aircraft.
Ben’s extensive experience enables him to appreciate the complex audit, compliance issues and risk matters of super funds like AvSuper. Ben’s practical experience is of great benefit to the Fund and its members, especially in his previous roles as Chair of the Audit, Compliance and Risk Management Committee, Chair of the Remuneration and Nominations Committee and member of the Investment Committee for many years. His experience as a regulator has greatly assisted the Fund with its general communications with the regulator and helps ensure investment compliance matters are rigorously monitored. Ben also served on the Investment Committee for many years.
Through his work as an auditor, and his everyday engagement with the aviation industry, Ben has developed a keen eye for detail, and an ability to engage with people that will serve AvSuper well in the coming years.
“As well as on behalf of the AvSuper team and members, I personally want to thank George his years of dedicated service and leadership of the Fund and the continuing focus on ‘members first’. We wish George well well as we continue into the future, running the Fund and delivering a high standard of service with a member-centric focus. ,” said incoming Chair, Ben Firkins.
We also want to congratulate Ben on this new role and are very pleased to put the Fund into his capable leadership. Ben’s experience in the aviation industry and in AvSuper make him ideal to lead our aviation based and member focused fund into the future.
If you have any questions about our Trustee Board, or any other matter about AvSuper or superannuation, please contact your AvSuper team on 1300 128 751 or AvChat (see link above).
Chief Executive Officer