May 2015 Federal Budget – key implications for your super
However the Budget did include a small number of superannuation related measures, some of which had been announced in the lead up to the Budget.
As always, we provide this annual summary of the superannuation changes proposed and discuss the likely implications for AvSuper members.
Michelle Wade Chief Executive Officer
Generally the announcements made as part of the Budget will have to pass as legislation before they take effect. Therefore, Budget proposals should not be taken as fact yet, even if a starting date is proposed.
Some Budget proposals have not yet been explained in detail by the Government. As further details become available we will analyse their relevance to AvSuper and report to members as appropriate.
Earlier access to super for those with a terminal medical condition
Currently, a member needs two medical practitioners (one of whom must be a specialist) to certify that they are likely to die within one year from a terminal illness so they can gain unrestricted access to their superannuation balance on a tax free basis. From 1 July 2015, the one year period (in which the medical practitioners certify that the member is likely to die) will be increased to two years, allowing members to access their benefits earlier.
We view this as a positive move for members and their families facing extremely difficult personal circumstances. This change will allow more members access to their super earlier and will provide for members to arrange their affairs and the future financial support of their families with more certainty and flexibility. It is not known whether life insurance policies within superannuation will be amended to reflect this definition.
Lost and unclaimed super
From 1 July 2016, the Government will implement a package of measures to reduce red tape for super funds and individuals by removing redundant reporting obligations and by streamlining administration arrangements for lost and unclaimed super accounts.
We welcome these changes which will make it easier for individuals to be reunited with their lost and unclaimed super and will reduce the costly reporting obligations currently imposed upon superannuation funds.
Government Aged Pension related changes
From 1 January 2017, the Government proposes to increase the level of assets an individual may have in addition to their home, in order to qualify for a full Government Aged pension. Government also proposes to reduce the maximum asset thresholds to part pension eligibility.
The Government also confirmed its intention to scrap its previous decision to change Government Aged pension indexation arrangements to a CPI related methodology (which would have resulted in lower annual indexation rates than under the current rules).
While these measures do not directly affect superannuation benefits, they will have mixed results with some individuals receiving an increased Government pension entitlement, and others resulting in a reduction of Government pension benefits, especially wealthier Australians. Some individuals may lose their Government pension entitlements altogether. The Government has stated that affected individuals will be guaranteed eligibility for the Commonwealth Seniors Health Card or Health Care Card, which provides the same concessional access to pharmaceuticals as given to those on the Government Aged Pension.
AvSuper members close to the relevant thresholds may be able to consider strategies to reduce assessable assets in order to increase/retain their Government pension entitlements. If you are receiving the Age Pension or are nearing that time, please contact our Member Advice Consultants for assistance in assessing the potential impact of these changes.
As always, we will keep members informed about such changes as things develop so be sure to watch our website and read our Annual Report.
Email: firstname.lastname@example.org | Local call: 1300 128 571 | Phone: 02 6109 6888 | www.avsuper.com.au
This information is of a general nature only and does not take into account your personal objectives, situation or needs. Before making a decision about AvSuper, you should consider your own requirements and the relevant Product Disclosure Statement (PDS). For a copy call us or visit the AvSuper website, www.avsuper.com.au. AvSuper Pty Ltd (ABN 46 050 431 797, AFSL 239078) is the Trustee of the AvSuper Fund (ABN 84 421 446 069). FS0001.6 05.2015