Superannuation From July 2017 – The State Of Play

From 1 July 2017, there are a number of key changes in thresholds and rates impacting on superannuation, including most of the measures announced in the 2017 Federal Budget. In this article we examine thresholds and rates that apply from 1 July 2017 and recent reform amendments.

Superannuation thresholds

Measures now in force in 2017/18 include:

• Non-concessional contributions cap of $100,000 or up to $300,000 if using bring forward rules.
• The 30 June ‘total superannuation balance’ also determines the available non-concessional contribution cap in the subsequent financial year.
• Concessional contributions cap of $25,000 for contributors of all ages.
• Pension transfer balance cap of $1.6 million limits the value of 30 June 2017 retirement phase pensions and commencement of new pensions.
• Earnings of investments backing transition to retirement pensions no longer have the tax exemption. Further, transition to retirement pensions do not count towards the pension transfer balance cap until a retirement condition of release is met, or turning age 65. At this point earnings on the transition to retirement pension will become tax exempt.
• Superannuation death benefits must be cashed by paying a lump sum or pension to an eligible beneficiary, they cannot remain in or be rolled back to accumulation phase.
• Superannuation death benefits retain that identity within the superannuation system, cannot be combined with a member’s own benefits, but can be rolled to another income stream provider.
• The pension transfer balance cap also applies to death benefit pensions. Special rules apply to reversionary pensions and pensions paid to children.
• Limited Recourse Borrowing Arrangements (LRBAs) – where an LRBA is in place in relation to an asset that backs a pension, any repayment to this loan from a source other than the pension account, such as the member’s accumulation account; will give rise to a credit to the member’s transfer balance account.

Increase in preservation age

From 1 July 2017, the earliest age at which those born after 30 June 1961 can access preserved superannuation benefits is age 57.

Preservation age is progressively increasing as per the following table:

Notes

• Accessing superannuation upon reaching preservation age is permitted once an individual retires.
• ‘Retirement’ is defined differently for those between their preservation age and age 60, and for those age 60 or more but less than age 65.
• Preservation age is the same for both men and women.
• Those who have not yet retired, but have reached their preservation age, may access preserved benefits by commencing a transition to retirement pension

Centrelink Age Pension

From 1 July 2017, the qualifying age for Centrelink’s Age Pension increased to age 65 and six months. This initially affects those born between 1 July 1952 and 31 December 1953, who will now be eligible for the age pension from 1 January 2018.

The age Pension qualifying age will further increase as per the following table:

You may choose to seeking financial advice to determine how the above may impact on your situation.