There’s been a series of super changes in recent months. Here’s a brief outline of key changes and what they could mean for you.
Compulsory super contributions
On 1 July 2023, the compulsory super paid by your employer went up from 10.5% to 11% of your income. That 11% is scheduled to increase by half a percent each year till we hit 12% in 2025.
The intention behind this measure is to see a greater proportion of retirees relying less on the Age Pension and more on their retirement savings.
The super transfer limit has increased
Until 1 July this year, the maximum amount you could move from super into tax-free retirement super income streams, such as Account-Based-Pensions and Annuities, was $1.7 million (called the ‘transfer balance cap’). Because of indexation, that has now been increased to $1.9 million.
If you had a tax-free retirement pension before 1 July 2023, your cap may only be partially increased and the ATO will calculate your personal transfer balance cap. If you think you may be impacted, speak with the ATO or your accountant. You can also check your personal transfer balance cap via your myGov account.
Increase to Age Pension age
Australians born on or after 1957 will have to wait until they’re 67 years old—up from 66 years and six months—before they can apply for the Age Pension.
This increase also applies to the Commonwealth Seniors Healthcare Card.
In addition to your age, to receive the Age Pension you must be an Australian resident and have lived in Australia for at least 10 years. Your income and assets must also be below certain limits.
Changes to minimum withdrawals from pension products
In response to COVID, the Government temporarily reduced the minimum amount you needed to withdraw from retirement pension products.
As of 1 July 2023, the temporary reduction in drawdown rates ended, meaning those using a retirement income stream will be required to withdraw more of their super each year.
This table shows the temporary rates and the normal rates:
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