You’ve worked hard for your superannuation savings, so it’s quite understandable that you get frustrated when it erodes due to fees and insurance premiums. Good news is there’s something that can be done to protect your super.
Earlier this year, the government passed Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018. The new legislation aims to reduce the erosion of superannuation balances and inappropriate insurance arrangements.
APRA-regulated funds are required to start reporting and transferring inactive low-balance accounts to the ATO by 31 October 2019. These inactive accounts can be rolled over or consolidated into other Funds.
However, the new changes mean that superannuation accounts with balances below $6,000 that have not received a contribution for 16 months will be transferred over to the ATO.
In 2015-16, superannuation accounts with balances below $6,000 comprised over 40% of all accounts in the system. These accounts face disproportionately high fees and insurance premiums.
Previously, the MySuper settings mandated the provision of death and total and permanent disability insurance, primarily on an opt out basis and allowed for income protection insurance to be provided on an opt out or opt in basis.
The ATO states “We will now be able to proactively consolidate eligible unclaimed super money into eligible active super accounts, including SMSFs and small APRA funds, if an individual hasn’t requested a direct payment of this money or for it to be rolled over to a fund of their choice.”
The new law also limits the maximum amount of administration and investment fees annually to 3% of the account balance where the balance is less than $6,000 and if the amount is exceeded the Trustee must refund the excess within 3 months of the end of the funds income year. Exit fees are likewise prohibited.
There are so many things to know about this new legislation. Find out more about it from Effective PD’s webinar. To subscribe, visit www.effectivepd.com.au. Effective PD offers an innovative way for busy accountants to be on top of their game with continuing professional development in a brief, flexible and easy way
