In February 2022, legislation was passed in parliament which brings into effect some welcome refinements to super that were originally announced in last year’s Federal Budget.
These welcome changes will now come into effect from 1 July 2022 and include:
1 July 2022 will also see the Superannuation Guarantee contribution (SGC) rate increase from 10% to 10.5%.
Currently there is a $450 monthly income threshold applying to the payment of superannuation guarantee contributions by employers. That is, if you’re age 18 or over, your employer is not obliged to make superannuation guarantee contributions on your behalf unless your monthly income is $450 or higher.
This monthly threshold currently prevents an estimated 300,000 low paid workers, 63% of whom are female1, from receiving mandatory employer super contributions.
From 1 July 2022 this threshold will now be abolished, improving superannuation equity for those on low-incomes or working multiple part-time jobs.
From 1 July 2022 the current super contribution “work test” will be abolished. The current test requires those aged between 67 and 74 to be gainfully employed for at least 40 hours over 30 consecutive days during the financial year before concessional or non-concessional super contributions can be made.
This change will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional (including under the bring-forward rule) or salary sacrifice superannuation contributions without meeting the work test, subject to existing contribution caps. Find out more about superannuation contribution caps.
From 1 July 2022, retirees who downsize their family home will be now able to contribute $300,000 to superannuation ($600,000 for couples) from age 60, currently this only applies to those aged 65 and above.
While not part of the 2021-22 Federal Budget measures, another change coming into effect from 1 July 2022 is the next scheduled increase in the level of superannuation guarantee contributions employers are required to pay.
From 1 July 2022 this will increase to 10.5% of income, up from 10% in the 2021-22 financial year, part of a series of incremental increases to take the level of superannuation guarantee contribution to 12% from 1 July 2025.
A recent change to super which came into effect from 1 November 2021 is fund stapling. This is where your current active super account stays with you as you change jobs.
You still retain choice over your preferred super fund however now, by default, your new employer is required to pay your super contribution to your existing super account rather than creating a new account for you every time you change jobs.
1. Source: AIST Special Federal Budget 2021-22 news article https://www.aist.asn.au/Media-and-News/News/2021/Special-Federal-Budget-Edition-2021-22#3