Changes to super contribution rules may create a great opportunity to revisit your savings and super contribution strategies. The changes may create new or enhanced options to build your savings. Outlined below is a brief explanation of some of the key changes and how you could benefit.
Whether you’re thinking about retirement, have already retired, or even looking to purchase your first home, there is likely to be value in reviewing your circumstances and having a discussion with a financial adviser about how these super changes could benefit you.
New and expanded contribution opportunities
Individuals aged 67-74 will have a greater opportunity to contribute to super with the following changes:
- the removal of the work test for personal (after-tax) contributions and salary sacrifice contributions,
- an increase to the amount of after-tax contributions that may be made within a single financial year.
Downsize your home and boost your super
Downsizer contributions allow eligible individuals to contribute some or all of the proceeds of the sale of their home, without impacting other contribution caps. Unlike NCCs, downsizer contributions do not have a total super balance limit, or an upper age limit. This means it could be a great, final way to boost super for those who don’t meet other eligibility rules to contribute, or where the NCC cap has been earmarked for other purposes.
The eligibility age was reduced from 65 to 60. The age reduction increases the number of individuals who may be eligible to make a downsizer contribution and boost their retirement savings.
Access more to buy your first home
The First Home Super Saver Scheme (FHSSS) allows you to make voluntary contributions of up to $15,000 per year within your concessional and NCC caps and you can later withdraw an amount of those voluntary contributions plus earnings (calculated at a set rate by the ATO on the amount you withdraw). The maximum amount of voluntary contributions that you can withdraw increases from $30,000 to $50,000 from 1 July 2022. This boosts the amount that can be accessed from super and directed to buying your first home.
More employees eligible for super from their employer
Superannuation Guarantee (SG) requires employers to pay a minimum level of super support for eligible employees. One criterion for an employee to be eligible is based on that employee’s monthly earnings being at least $450 per month. However, this threshold is abolished from 1 July 2022. allowing all eligible employees to receive SG paid into their super fund.
This measure primarily assists low-income earners to have employer contributions paid to super boosting their retirement savings. Contact the team at LA Wealth today for more information on the changes and how they may provide opportunities for you.
Contact the team at LA Wealth today for more information on the changes and how they may provide opportunities for you.