EXPERT INSIGHT / SUPERANNUATION
TIME TO ENGAGE There is a plethora of changes scheduled for superannuation in the coming months. Damian Hill, CEO, REST Industry Super, outlines what’s in store
The government has announced a number of changes to superannuation, intended to improve the system by making it more transparent, efficient and fair. These changes present a great opportunity to reconnect with your employees about their super. The key is to engage early to ensure they are aware and can better manage their financial wellbeing.
GOVERNMENT CONTRIBUTION FOR LOW INCOME EARNERS
If an employee earns less than $37,000 per year they may benefit from the Low Income Super Contributions (LISC) scheme. This is a refund of the tax that is applied to any employer or concessional (before-tax) contributions made to their super fund. An employee may receive up to $500 per year from the government into their super account and if the payment is less than $10, it will be rounded up to $10.
THE GOVERNMENT’S COCONTRIBUTION HAS ALSO CHANGED
If your employees meet the income tests for the government’s co-contribution scheme, they can receive a tax-free super contribution from the government when they make a nonconcessional (after-tax) contribution to their super account. The government will pay $0.50 for every dollar your employees contribute to their super fund in after-tax dollars, up to a maximum co-contribution of $500 a year.
MORE SUPER FOR EMPLOYEES
The Superannuation Guarantee (SG) contribution rate is progressively increasing from the current 9.25% rate to 12% by 1 July 2019. Plus, people 70 and over, that meet the minimum required working hours and salary, are now able to receive SG contributions.
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“These changes present a great opportunity to reconnect with your employees about their super” - Damien Hill MYSUPER – THE NEW DEFAULT SUPER ACCOUNT
From January next year, if employees haven’t chosen a super fund, your business will have to pay SG contributions into a fund with a MySuper offering. REST has two MySuper product offerings. REST Super is an award-winning product with a MySuper offering that is open to all employees and offers automatic life stage insurance cover.* Employees can create their own investment portfolio from 13 options including the Core Strategy, which was ranked number one in the balanced option survey over the last five, seven and 10 years^ to June 2013. REST Corporate is a completely new super product, available now, with a MySuper offering and salary based insurance. The insurance can be adjusted according to employees’ income levels and occupation so they have the flexibility to choose their own level of cover. More information about these products is available on our website at rest.com.au/ corporate or rest.com.au/super.
THE CONCESSIONAL CONTRIBUTION CAP FOR MATURE AUSTRALIANS HAS INCREASED
For the 2013/14 financial year, there was an
increase from $25,000 to $35,000 of concessional contributions for people aged 60 and over. From the following year, people aged 50 and over can also contribute up to $35,000 per financial year without a penalty, up from the $25,000 cap that applies this year.
HIGHER CONTRIBUTION TAX FOR HIGH INCOME EARNERS
Anyone earning more than $300,000 will now pay 30% tax on their concessional (before-tax) contributions to their super. The regular contributions tax is 15% so this change is essentially doubling the super tax bill for high-income earners. The additional tax will be assessed when the individual processes their tax return. Consider whether REST is appropriate to your objectives, financial situation and needs. Please read our Product Disclosure Statement (available at www.rest.com.au or by calling 1300 300 778). REST Industry Super is the Retail Employees Superannuation Trust ABN 62 653 671 394, issued by Retail Employees Superannuation Pty Ltd, AFSL 240003. *Subject to eligibility SuperRatings Fund Crediting Survey – June 2013 (SR50 Balanced). Past performance is not an indicator of future performance. SuperRatings Pty Limited does not issue, sell, guarantee or underwrite this product. Go to superratings.com.au for details of its ratings criteria. Ratings, awards or investment returns are only one factor that you should consider when deciding how to invest your super
OCTOBER 2013 | 9