Protecting your Super – What does it all mean?
What is it?
The Protecting Your Super Package which passed in February 2019 has seen a range of measures recently introduced which affect the way that small and inactive superannuation accounts are handled. In the main, these measures are a positive. The key objective of the legislation is to limit the erosion of low balance super accounts by fees and unwanted insurance premiums.
For most of you, APC will have worked together with you to ensure your superannuation accounts are consolidated or in good working order. But for various reasons, individuals might have a number of superannuation accounts at any given point in time – so sometimes it can be hard for you to keep track. Given the pace of implementation of some of these changes, we have provided an overview of the key measures below – and always, APC is here to help.
The first stage of these measures has begun to take place. Certain people will have been asked to ‘opt-in’ for their insurance before 1 July 2019 – that is, an election made to keep your insurance despite having an inactive account. Opting-in notifies your super fund that you are aware of the insurance and that you do want to continue paying the premium. If you have done this, you won’t need to do it again. It only becomes a question once an account becomes inactive and this generally means 16 months without activity, like any contributions received.
Inactive Low Balance Accounts
Super funds will be required to transfer ‘inactive low balance’ accounts to the Australian Tax Office if certain criteria is met, commencing in the coming months and then ongoing. Low balance means less than $6,000. The account must also be deemed inactive for the preceding 16 months. If you have insurance that you ‘opted-in’ for attached to the account, you won’t be affected.
Once transferred, the ATO will aim to locate your ‘active’ account, ultimately consolidating your superannuation monies there.
What should you do?
Consolidation of your inactive accounts is likely to be a good thing for most, particularly if you might have accounts from previous employment that you have had trouble keeping track of.
If you think an unwanted change has been made to your accounts, please feel free to contact us or raise it at your next planning meeting. This includes any cancellation of insurance cover that might have formed part of your wealth protection strategy.
Using MyGov to keep Track
A great place to start will be through your myGov account. Specifically, ‘linking’ the ATO will allow you to see the information they have about your superannuation balances and accounts.
In fact, APC might ask you for information from time to time which can be found here and that will allow us to better advise you when it comes to your superannuation strategies. This will be an important tool and ‘source of truth’ for most going forward.
As always, if you have any questions please don’t hesitate to ask.