Super stapling and legislation changes on 1 July 2022
ESSSuper - 04 May 2022
The Australian superannuation system can sometimes be challenging to wrap your head around, especially when it seems like it's always changing. However, thanks to several legislative reforms recently passing through parliament, we will be seeing some welcome simplifications.
To make a little more sense of these recent changes, we've put together this information on how these new reforms may affect you.
Superannuation stapling – effective 1 November 2021
Introduced as part of the recent Your Future, Your Super act, super stapling aims to stop you from having multiple super accounts unintentionally.
In the past, if you didn't tell your new employer your chosen super fund when changing jobs, they would pay your super contributions into their chosen default super fund. Under the new legislation, your employer will contact the ATO first, to see if you have an existing super fund unless you tell them your chosen super fund. The ATO will inform your new employer if you have a "stapled" super account. If you don't have a stapled super account, and you haven't told them your chosen super fund, your new employer is able to set up a new account in their chosen default fund. A stapled fund must meet certain conditions and will remain connected to you until changed by your choice. The introduction of super stapling emphasises the importance of carefully selecting a super fund best suited to your needs. The last thing you want is to be stapled to an underperforming fund.
If you have an ESSSuper defined benefit super account and leave one of our Emergency Service or State Employers, ESSSuper might become your stapled fund to which your new employer must pay your super contributions (unless you choose a different fund). ESSSuper would open an Accumulation Plan account on your behalf to receive those contributions. Visit our Accumulation Plan web page for more information about the product features. You can download the Accumulation Plan Product Disclosure Statement (PDS) and Target Market Determination (TMD) for Accumulation Plan from our PDS and handbooks web page. We also have more information about changing jobs.
Removal of the monthly income threshold – effective 1 July 2022
Casual, low-income, freelance, and part-time workers can often be left out of the super system. Your employer(s) only have to pay super guarantee (SG) contributions for you if you earn more than $450 in a month with that employer.
Removing the low-income SG threshold will mean that employers must now make super contributions for any amount of earnings, for any employee. It's estimated that the change will see approximately 300,000 more Australians become eligible to receive SG contributions and start saving for their retirement.
A happy bonus bit of news: The SG contribution rate is also rising to 10.5% of salary from 1 July 2022!
Lower eligibility age for downsizer contributions – effective 1 July 2022
Are you thinking about retiring and selling your main residence to downsize? If so, you may be able to contribute up to $300,000 from the sale (or part sale) into your super. The eligibility to make downsizer contributions will be extended from people aged over 65 to those aged 60 and older, and meet the normal downsizer conditions surrounding the sale of your main residence.
You can download our Downsizing contributions into super (FS032) fact sheet from our Publications web page for further information about this.
Higher withdrawal limit for First Home Super Saver Scheme – effective 1 July 022
The First Home Super Saver Scheme (FHSSS) was introduced to help aspiring first homeowners save a deposit through their super. If eligible, you can voluntarily contribute up to $15,000 to your super each financial year and withdraw this when you're ready to buy your first home. The new reform increases the maximum amount of voluntary contributions that you can withdraw using the FHSSS from $30,000 to $50,000.
For more information about the FHSSS, check out our First Home Super Saver Scheme (FS031) fact sheet available on the Publications page of our website.
Removal of super contribution work test – effective 1 July 2022
If you're aged between 67 and 75, you won't need to meet the work test when making personal (non-concessional) contributions after this change comes into effect.
However, you'll still need to meet the work test to claim a tax deduction for any personal non-concessional contributions if you're aged 67 to 74.
More information
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