{"id":1882,"date":"2018-05-25T16:45:53","date_gmt":"2018-05-25T06:45:53","guid":{"rendered":"https:\/\/cruzandco.com.au\/?p=1882"},"modified":"2018-05-25T12:28:04","modified_gmt":"2018-05-25T02:28:04","slug":"budget-2018-forget-tax-cuts-superannuation-bonanza","status":"publish","type":"post","link":"https:\/\/cruzandco.com.au\/budget-2018-forget-tax-cuts-superannuation-bonanza\/","title":{"rendered":"Budget 2018: Forget Tax Cuts, This Is a Superannuation Bonanza"},"content":{"rendered":"

By\u00a0Jackson Stiles<\/strong><\/p>\n

\"\"<\/a>Lost, unpaid and eroded superannuation will be reunited with workers under a massive superannuation package announced in the federal budget \u2013 which will also try to kick our addiction to lump sum payouts in retirement.<\/p>\n

Fewer bosses will get away with stealing retirement payments from their workers and less super will be eaten up by unnecessary and excessive fees, if the government\u2019s plan works.<\/p>\n

The Protecting Your Super Package, announced in Tuesday\u2019s budget, will cap passive fees, hunt down unpaid super, ban exit fees, and help workers find accounts they had long forgotten about.<\/p>\n

Finance Services Minister Kelly O\u2019Dwyer said the changes would be of special help for women, who often have \u201cinterrupted work patterns and low incomes\u201d.<\/p>\n

Interestingly, hidden deep in the budget, is the beginnings of an attempt to coax workers to make their superannuation last longer by drawing incomes from it, rather than taking it all in a lump sum in retirement, as most do now.<\/p>\n

But the centrepiece of the package was undoubtedly the measures on unpaid super. After years of inaction and a growing chorus of dismay from workers, the Labor party and industry, comes the stunning admission from the government that the problem of unpaid super is rife.<\/p>\n

Unpaid super<\/strong><\/h3>\n

Unpaid superannuation was thrust into the national debate in 2016 when research by Industry Super Australia and Cbus estimated that almost three million workers were losing a collective $5.6 billion a year from their retirement accounts (based on 2013-14 figures). That worked out to an average of $2025 each \u2013 money their bosses were legally required to pay.<\/p>\n

The Australian Taxation Office, which at first\u00a0resisted calculating the figure, put it at a more conservative $2.85 billion a year.<\/p>\n

In Tuesday\u2019s budget, Treasurer Scott Morrison promised to instruct the ATO to \u2018proactively find your lost super\u2019, an admission there was a problem.<\/p>\n

And there is serious money behind the promise.<\/p>\n

The ATO will get an extra $186 million in 2018-19 alone to enforce payment of superannuation. Each year it will get more than $30 million extra to spend on collecting superannuation debts from employers (although this money will also be spent on collecting unpaid tax).<\/p>\n

Lost super, forgotten no more<\/strong><\/h3>\n

Inactive super accounts will also be sent back to the ATO much more often, hopefully resulting in the forgotten funds being reunited with their rightful owners.<\/p>\n

Instead of small amounts sitting idle, slowly eroded by fees, the ATO will seize inactive accounts with balances of less than $6000 and use an \u201cexpanded data matching process\u201d (a fancy term for computer software) to find the worker\u2019s active account and consolidate the two.<\/p>\n

Inactive accounts \u2013 those which haven\u2019t received any contributions in 13 months \u2013 are an especially big problem among younger and itinerant workers, who often bounce between multiple employers, losing track of their multiple super funds as a result.<\/p>\n

These same sub-$6000 accounts \u2013 of which there are about 10 million in Australia \u2013 will also get a fee cut. Passive fees, charged by super funds for collecting and investing your retirement savings, will be capped at 3 per cent on accounts with balances under $6000.<\/p>\n

Unnecessary insurance axed<\/strong><\/h3>\n

Experts have long argued that young workers without homes and dependents (partners and children) probably had no need for insurance.<\/p>\n

Several industry super funds, including the largest, AustralianSuper, had already moved to allow young workers to opt out of insurance.<\/p>\n

The government will bolster this by preventing all super funds, retail and industry, from forcing workers under the age of 25 to take out life insurance. From July 2019, life insurance for under-25s will be voluntary.<\/p>\n

This could save about\u00a0five million workers in the vicinity of $3 billion, according to the government.<\/p>\n

Exit fees banned<\/strong><\/h3>\n

Retirement savers will soon be free to move their super savings into any account they wish, without taking a financial hit as they leave.<\/p>\n

Exit fees will be a thing of the past, with the government to ban them outright from July 2019.<\/p>\n

Lump sums discouraged<\/strong><\/h3>\n

As already noted, Australians like to withdraw their superannuation in a lump sum when they retire, rather than drawing an income from it. Part of this is cultural \u2013 and part is a lack of income stream products in Australia.<\/p>\n

Tuesday\u2019s budget moved to address\u00a0this shortfall\u00a0by putting aside $20.2 million to amend the pension means test rules to \u201cencourage the development and take-up of lifetime retirement income products that can help retirees manage the risk of outliving their savings\u201d.<\/p>\n

In simple language, it means the government wants to tempt workers to buy these income stream products so they rely less on the age pension. The most common of these is a life annuity, which workers contribute to during their working lives, in exchange for regular payments when they retire \u2013 much like a self-funded pension.<\/p>\n

Also, the government will amend the law to require super fund trustees \u2013 who oversee funds \u2013 to \u201cformulate a retirement income strategy\u201d for their members.\u00a0This is another attempt to create more annuity-style products.<\/p>\n

 <\/p>\n

Source: The New Daily<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Jackson Stiles<\/strong><\/p>\n

Lost, unpaid and eroded superannuation will be reunited with workers under a massive superannuation package announced in the federal budget \u2013 which will also try to kick our…<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":""},"categories":[3],"tags":[29],"acf":[],"_links":{"self":[{"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/posts\/1882"}],"collection":[{"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/comments?post=1882"}],"version-history":[{"count":2,"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/posts\/1882\/revisions"}],"predecessor-version":[{"id":1885,"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/posts\/1882\/revisions\/1885"}],"wp:attachment":[{"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/media?parent=1882"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/categories?post=1882"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cruzandco.com.au\/wp-json\/wp\/v2\/tags?post=1882"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}