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Super is changing - What it means for you

10th September, 2021

When the Federal Government handed down its budget in May 2021 it announced a raft of changes to super. This article explains how some of the changes might affect you.

Superannuation guarantee (SG) contributions increase to 10%

The minimum amount an employer must contribute to your super increased to 10% on 1 July 2021. This won’t change superannuation arrangements for ADF members as defined benefit schemes, like DFRDB and MSBS are not subject to SG contributions, and accumulation fund members, such as ADF Super members, are already receiving contributions equivalent to 16.4% of salary and allowances, well above the minimum.

This may have implications however for a working non-military spouse.

Concessional contributions

Concessional contributions include employer and salary sacrificed contributions. They are called concessional contributions because they are paid from pre-tax income, and taxed at 15% by your super fund, which is usually much lower than your marginal tax rate.

The annual concessional contribution limit has increased to $27,500 from 1 July 2021. If you’re looking to boost your super balance, this allows you to contribute an extra $2,500 tax effectively.Defined benefit members will need to use the Concessional contributions estimator on the Commonwealth Super Corporation (CSC) website to estimate your notional defined benefit contribution amount that counts toward your concessional contribution cap.

Non-concessional contributions

Non-concessional contributions include contributions made from after-tax money, such as the 5% mandatory contributions that MSBS members make, or voluntary contributions you make yourself. Non-concessional contribution limits increased to $110,000 on 1 July 2021. This could be useful if you had say, received a windfall or sold an investment, and wanted to make a large contribution to super. 

There is a ‘bring forward’ rule that, in most cases, allows you to contribute up to three years’ worth of non-concessional cap amounts in one hit.

Super stapling

Under the Government’s ‘Your Future, Your Super’ reforms, from 1 November 2021, if you have an accumulation super fund your current employer pays into, and you change employers, your new employer will have to pay into the same fund, if you don’t make a different choice of fund.

The new law aims to reduce the number of super funds each person has, and therefore reduce the amount of money being lost in fees.

This will not apply to defined benefit funds like DFRDB and MSBS, however if you have ADF Super and leave Defence after at least one year of service, then your ADF Super fund can now go with you to your new employer.

Underperforming funds named and shamed

The Government’s ‘Your Future, Your Super’ reforms also include a provision to call out MySuper products (employer default funds) whose returns do not meet a specified benchmark. These funds will have to notify their members that their fund underperformed and if it happens two years in a row, they will not be able to accept new members.

If you get notified that your fund is underperforming, it might be time to look for a new super fund. Investment returns will determine, in part, how well you live in retirement, and there are plenty of good funds to choose from.  You can access the Government’s new YourSuper comparison tool at www.ato.gov.au. If you have any questions about your super, and you are a DFRDB, MSBS or ADF Super member please contact the Commonwealth Superannuation Corporation, your super fund if you are with someone else; or if you have more general questions about personal finances contact us.


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