Protecting Your Super Package will cross finish line: Treasurer

Federal Treasurer Josh Frydenberg outlined in the Budget that part of the Protecting Your Super Package has been delayed but flagged it will pass into law before the end of 2019.

A new law to enable superannuation fund members with a balance less than $6000 and new members aged under 25 to opt-in to default insurance has been pushed back to 1 October 2019.

This part of the Bill was deferred following a deal between the Greens and Coalition.

In pushing ahead with protecting members paying for insurance they don't want or need, Frydenberg said the changes will also reduce the incidence of duplicated cover so they are not paying for multiple insurance policies they may not be able to claim on.

It was originally slated to take effect from 1 July 2019, together with the banning of exit fees and giving the ATO powers to oversee inactive accounts under $6000 that were introduced in last year's Budget.

In terms of other new measures, the Government will provide permanent tax relief for merging superannuation funds from 1 July 2020 (when it was due to expire) as encouraged by the Productivity Commission's recommendation in its final report into superannuation.

The tax relief enables superannuation funds to transfer revenue and capital losses to a newly merged fund and defer taxes on gains and losses from revenue and capital assets.

Frydenberg warned the Government is cracking down on unpaid super by giving the ATO $42.1 million over four years to ramp up unpaid tax and superannuation liabilities recovery initiatives.

"These activities will focus on larger businesses and high wealth individuals to ensure on-time payment of their tax and superannuation liabilities. The measure will not extend to small businesses," he said.

Frydenberg vowed to reduced red tape by simplifying reporting obligations and streamlining administrative requirements when calculating the exempt current pension income (ECPI).

From 1 July 2020, trustees with interests in the accumulation and retirement phases during an income year can choose their preferred method of calculating ECPI. Furthermore, it will abolish the requirement of obtaining an actuarial certificate when calculating ECPI using the proportionate method.

The Government will seek expressions of interest in 2019-20 to help establish a Superannuation Consumer Advocate and provide $100,000 of funding.

"The Advocate would provide input on behalf of consumers in policy discussions and provide information to educate and assist consumers navigate the superannuation system," he said.

Frydenberg announced overnight that voluntary superannuation contributions will be relaxed. Sixty-five and 66-year-olds will no longer need to meet the work test from 1 July 2020.

Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said it was disappointing that superannuation reforms in this Budget do not address the problems women and men who earn low incomes and approach retirement with very little or no super face.

"Data from four large industry funds indicate that less than 10% of men and women make voluntary contributions up to their late 40s, while for older people it is less than 25%," she said.

These changes, while they may improve retirement outcomes for a very small minority of people, won't improve outcomes for the vast majority of retirees, Scheerlinck added.

Read more: GovernmentATOJosh FrydenbergAustralian Institute of Superannuation TrusteesCoalitionEva ScheerlinckGreensProductivity CommissionSuperannuation Consumer Advocate
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