From 1 July 2009, a number of significant changes are being made both to super and to your super fund.

These changes are a result of improvements to TWUSUPER, changes to superannuation law and changes announced in the 2009 Federal budget.

Read on for a summary of how they are likely to affect you.

Before acting on any of this information we recommend you talk to a professional financial adviser.
 

Changes to TWUSUPER from 1 July 2009

Changes to super from 1 July 2009

Changes to TWUSUPER from 1 July 2009

TWUSUPER moves to monthly crediting rates

On 1 July 2009 TWUSUPER moved from year to date crediting rates updated monthly, to monthly crediting rates updated weekly.

TWUSUPER uses crediting rates to determine the investment earnings that are applied to a member’s account. Crediting rates are based on the investment earnings for each investment option, adjusted for estimated tax, investment management and other costs.

Crediting rates are applied to a member’s account at the end of each financial year. They are also applied when a member switches investment options, leaves the Fund, makes a withdrawal or transfers into another division of the Fund.

Weekly investment option switching launched

From 1 July 2009, members of TWUSUPER and other divisions will be able to switch their investment options weekly instead of monthly. Click here for more information.

Changing the way your super is invested is a big decision. This decision should only be made with your long-term investment and risk strategy in mind. We suggest that you talk to a professional financial adviser before you make any changes to your super - it could make a big difference to the amount of money you retire with. Money Solutions*, TWUSUPER’s financial advice partner can help with your investment decisions.
 

* The Trustee is not responsible for and does not accept liability for the products or services or actions of Money Solutions AFSL: 258145. You should use your own judgement before taking up any products or services offered by Money Solutions.

Balanced investment option adjusted

Over a period of time from 1 July 2009, TWUSUPER’s default balanced investment option will be adjusted to an asset allocation of 80% in growth assets and 20% in defensive assets. Previously the asset allocation was maintained at 75% growth assets and 25% defensive assets.

This will allow us to take advantage of investments that offer attractive returns on a risk-adjusted basis, without altering the long term strategic asset allocation of the balanced investment option.
 

Cap on admin fees for protected members

TWUSUPER protects members’ accounts when they are less than $1,000 from erosion by fees. We do this by ensuring that fees deducted (excluding insurance premiums and taxes) do not exceed the investment earnings credited to the account.

When the investment earnings credited or debited to your account are insufficient to cover the administration fee, then the administration fee will be capped at $10 (plus an amount equal to any investment earnings credited).

This administration fee has previously only been applied at the annual review date but from 1 July 2009 it will apply to all account closures throughout any year.
 

Lost accounts to be transferred to the ATO monthly

From 1 July 2009, TWUSUPER will transfer a member’s benefit to AUSfund monthly where:

• the member’s account balance is less than $1,000 and
• no contribution has been received for at least 15 months.

Previously, TWUSUPER transferred these accounts quarterly.

 
 

Changes to super from 1 July 2009

Concessional contribution cap reduced

From 1 July 2009, the concessional contribution cap will be reduced to $25,000 each year for people under 50. Concessional contributions include SG, salary sacrifice contributions, voluntary contributions made by your employer and tax-deductible personal contributions.

This is an important change because some people (particularly people who salary sacrifice into super) might accidentally exceed the reduced cap and be subject to an extra 31.5% tax on that excess.

All members who salary sacrifice into super or receive voluntary employer contributions (above 9% SG) should review their contributions for the new financial year. Call us on 1800 222 071 for more information or contact Money Solutions* for professional financial advice. 

The non-concessional contribution cap will stay the same at $150,000 each year. The bring-forward rule still stands, allowing members aged under 65 to make a total of $450,000 in non-concessional contributions over a three year period without penalty.

Click here to read more about contribution limits.
 

* The Trustee is not responsible for and does not accept liability for the products or services or actions of Money Solutions AFSL: 258145. You should use your own judgement before taking up any products or services offered by Money Solutions.

Government co-contribution scaled back

From 1 July 2009, the Government will reduce the co-contribution to a maximum of $1,000 or $1 for every $1 an eligible person contributes.

This will only be a temporary cut, with the co-contribution gradually increasing back to a maximum of $1,500 or $1.50 for every $1 contributed in the 2014/15 financial year.

The co-contribution is still a great way for people earning less than $61,920 a year (for the 2009/2010 financial year) to boost their super.

To find out if you are eligible for the co-contribution, click here or use the ATO’s co-contribution calculator to find out your maximum possible co-contribution (this link will open in a new window).
 

Salary sacrifice now counted as income for co-contribution and other benefits

From 1 July 2009, salary sacrifice and other voluntary employer contributions no longer reduce total income for people trying to qualify for:

• the government co-contribution;
• certain means-tested benefits, like the $5,000 baby bonus; or
• the tax offset for spouse contributions.

The co-contribution can only be claimed by people whose total income is less than $61,920 for the 2009/2010 financial year. Click here to read more about the co-contribution.
 

Pension payment relief extended

The Government has extended the temporary 50% reduction in the minimum pension drawdown for the 2009-2010 financial year.

This reduction was introduced in February 2009 as a way to help superannuation pensioners avoid crystallising losses caused by the downturn in global financial markets.
 

TransPension members will receive a letter informing them of this change and the impact on their pension payments.

Changes to the Age Pension qualifying age

The 2009 Federal Budget announced that the Age Pension qualifying age will gradually increase to age 67 in 2023. The transition to the higher Age Pension qualifying age will commence in July 2017, with the qualifying age increasing by six months every two years, to reach 67 on 1 July 2023.

For more information about qualifying for the Age Pension, please visit www.centrelink.gov.au (this link will open in a new window) or call Centrelink on 13 23 00.

Same-sex reform

The Government has recently changed a range of Commonwealth laws, including taxation and superannuation laws, to provide same sex couples with access to the same entitlements as opposite-sex couples.

The new laws apply to the distribution and taxation of superannuation death benefit entitlements, splitting superannuation benefits after the breakdown of a relationship and access to the tax offset for eligible spouse contributions.

The legal definitions of ‘Spouse’ and ‘Child’ have also changed.

If you would like to know more, please call us on 1800 222 071 or visit the Australian Government Attorney-General’s web page on same sex reform (this link will open in a new window).