New rules, new benefits: exploring the latest changes in superannuation

In a perfect world, important things like retirement income policy would remain unchanged to give everybody certainty and avoid unnecessary changes.

Superannuation is living proof that such a perfect world doesn’t exist, with the rules around retirement savings being constantly tinkered with ever since it was officially founded way back in 1992 when the 3% compulsory super levy came into being.

The rules around super have changed dramatically since then and they promise to keep on changing with a proposal to cap the amount able to be kept in superannuation accounts just the latest new rule being considered.

At various times since the start of super you have been able to withdraw chunks of it to help you out during the pandemic, put a staggering $1 million into it as a one-off contribution, get half of what you invest in super back as a co-contribution and even invest part of it in crypto – which brought in a whole new sport of precision market timing.

The one thing that many of these changes remind us is that you sometimes need to grab the bull by the horns with super and seize the opportunity because it may not be around forever.

If you tried to add $1 million to your super nowadays you would be in more tax trouble than Alan Bond at his best, but there really was a time when that was not only allowed but encouraged.

Changes – and opportunities – keep on coming

With that in mind, I thought I’d go through some of the more recent changes to super in case you see an opportunity that might be worth investigating further.

Remember, everybody has their own individual circumstances to consider so these are not recommendations, just opportunities that may or may not be a good idea for you.

As such, it is always a good idea to run them past a financial advisor, lawyer or accountant as appropriate to make sure they suit your needs.

The other thing to remember is that all of these changes were made by the previous Federal Government run by Scott Morrison so there is a good chance some of these “opportunities” won’t be around forever.

Keep an eye on contributions

The interplay between the super guarantee amounts paid by your employer and the voluntary concessional contributions you make are one vital area to get right.

The super guarantee went up from 10% to 10.5% on 1 July 2022 and is scheduled to keep rising by 0.5% each year until it reaches 12%.

At the moment the annual contributions cap is $27,500, so it pays to be extra careful and stay underneath that cap to avoid any unpleasant tax issues.

This is particularly the case for people who are sailing close to the cap but might be adopting a “set and forget” amount for voluntary contributions.

This strategy can really come unstuck when the super guarantee rises, effectively using up some more of the available annual contributions cap, so this is one area to keep careful track of.

Do you qualify for a health card?

With healthcare costs on the rise, a very big change to the availability of the Commonwealth Seniors Health Card (CSHC) is worth looking at, particularly for those who may have been retired for some time.

This valuable card is now available to a much greater number of people above the age pension age of 67 – many of whom, even multi-millionaires, would probably never even imagine that they would qualify.

The previous restrictive income threshold above which access to the card was denied has been dramatically increased, adding eligibility to an expected extra 50,000 people – assuming they know about the change.

Under the old rules, singles and couples could not get a card if they earned more than $57,761 and $92,416, respectively while the new limits are a lot more generous at $90,000 for singles and $144,000 for couples.

With no assets test and the ability to qualify for bulk billing at many medical clinics and access cheaper prescriptions, this is one benefit worth checking on.

The best way to apply for the card is by visiting Centrelink or online.

State-based energy and transport rebates and discounts on state government fees and charges may also apply if you get a CSHC.

More super for low-income workers

Another key change that is worth checking on is that you no longer need to earn a minimum of $450 a month, per employer, to get the superannuation guarantee (SG).

This is a vital change particularly for low-income, part-time workers and should hopefully drag a lot more workers and particularly women into the superannuation system.

If you are over 18 and were previously impacted by the threshold, it is worth taking the time to check that appropriate SG payments are being made into your super account.

Time to top-up?

Many older workers have not enjoyed the super system for a large chunk of their working lives but there are now some good opportunities to top-up super.

It used to be that you had to prove that you were working to put money in super but now that test has been removed for anyone under the age of 75.

There is a $110,000 annual cap for these types of contributions and penalties for breaching the limit so make sure you stay between the lines.

Downsize your way to glory

The eligibility for the downsizer contribution was this year reduced to age 55, allowing a lot more people the ability to top up their super from the proceeds of the sale of the family home.

Even better, downsizer contributions don’t count towards your concessional or non-concessional contribution caps and there’s no age limit and no requirement to meet the work test.

You can contribute up to $300,000, or $600,000 per couple, providing you’ve owned the family home for at least 10 years.

It is a great way to boost super accounts quickly, particularly when combined with other contributions and also, assuming you have an expensive house to sell.

Some of the rules around this include the contribution not exceeding the sale price and being made within 90 days of change of ownership.

Perhaps surprisingly you don’t need to spend less than the sale price on the next house but as you can imagine, this is one area where financial advice is a must due to the large sums involved and the difficulties if you get it wrong.

A final check

So, there we are, a few of the more recent rule changes that are well worth checking out on the basis of “grab it while it is going” rule.

Perhaps the greatest benefit though is to get more engaged with your super, whatever your age, balance or stage of life.

Make sure you are in a good performing, low-cost fund, that your risk profile is appropriate and keep an eye on contributions to make sure they are being paid correctly and you are well on the way to reaping the maximum benefits super can bring.