Super changes kick in for FY2023–24

Superannuation fund members will see numerous changes as we kick off a new financial year.  

Super Guarantee
The Super Guarantee will rise from 10.5 per cent to 11 per cent this financial year, seeing $330 a year flow into workers’ super accounts. It will then rise in 0.5 per cent increments each year to reach 12 per cent by 2025.

Industry Super Australia chief executive, Bernie Dean, said: “Even though the staged increases are small, they’ll add up to so much more in savings and that means a more secure future for millions of Australians. The big winners are those younger workers on lower incomes who have years left in the workforce to watch that compound interest grow.”

Research by Australian Retirement Trust last month found almost three-quarters of Australian consumers are unaware of the current SG rate.

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Total super balance cap
The total super balance cap will increase from $1.7 million to $1.9 million meaning consumers cannot make additional non-concessional contributions (post tax) to their super once their balance has passed $1.9 million.

Increase in transfer balance cap (TBC)
From 1 July, indexation of the TBC means it will also increase from $1.7 million to $1.9 million. This affects the amount of super that can be transferred into the retirement phase income streams including most pensions and annuities. Multiple retirement income streams can be opened but they must remain below the cap.

Removal of temporary reduction in minimum drawdown rates
The temporary 50 per cent reduction of the minimum pension drawdown rates, which were introduced in the COVID-19 pandemic, will end on 30 June 2023. From 1 July, the standard government minimum drawdown rates will apply which start at 4 per cent for a person under 65, rising to 5 per cent once they turn 65, then gradually rise in five-year intervals to 14 per cent when a person turns 95.

Government co-contribution
If an individual is eligible for a government co-contribution, they can receive an additional super contribution from the government. From 1 July, if a person earns between $43,445 and $58,445 and pays extra into their super, they may now be eligible for government contributions to their super fund. This is up from $42,016–$57,016. The maximum entitlement remains unchanged at $500.

Insurance claims handling 
The Financial Services Council’s (FSC) enforceable standard for handling group life insurance claims in super will commence operation on a mandatory basis for all FSC super members to complement the protections in the new Life Insurance Code of Practice.

The standard includes consumer-focused commitments for trustees to help their members navigate through the claims process including making a claim on their insurance, overseeing the time frames for claims assessment, reviewing the life insurer’s decision, and ensuring accepted claims are paid promptly to the member.