Superannuation Alert - 16.5.13

Financial Services eBulletin - 16 May 2013

The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry and is in addition to our Superannuation Update, which analyses the main developments of interest in more detail.

  • There were no significant new superannuation reforms announced in the 14 May 2013 Federal Budget. However, the following superannuation reforms, which were announced on 5 April 2013, were confirmed:   
    • a cap of $100,000 on tax-free earnings on superannuation assets supporting income streams from 1 July 2014
    • a $35,000 concessional contributions cap for individuals aged 60 and over from 1 July 2013 (and for individuals aged 50 and over from 1 July 2014) to replace the general concessional contributions cap until 2018 when the general cap is expected to reach $35,000. See exposure draft legislation "Tax and Superannuation Laws Amendment (2013 Measures No. 3) Bill 2013: Superannuation concessional contributions cap" and the draft explanatory memorandum;
    • all individuals to be able to withdraw from their superannuation fund any excess concessional contributions made from 1 July 2013. The withdrawn excess contributions are to be taxed at the individual's marginal tax rate plus an interest charge;
    • an extension of social security deeming rules;
    • deferred lifetime annuities to have the same concessional tax treatment as earnings on superannuation assets supporting income streams from 1 July 2014; 
    • the threshold account balance below which inactive accounts and uncontactable members must be transferred to the Tax Office to be increased from $2,000 to $2,500 on 31 December 2015 and $3,000 on 31 December 2016; the establishment of a Council of Superannuation Custodians. The Minister for Financial Services and Superannuation announced on 9 May 2013 the members of a Charter Group who will help develop the Charter of Superannuation Adequacy and Sustainability and establish the Council of Superannuation Custodians.  
  • The Government also made the following further announcements:  
    • additional funding of $2.6 million for the SCT and $5.4 million to enhance financial literacy;
    • minor amendments to the 2012-13 Budget measure to increase contributions tax on concessional contributions from 15% to 30% for individuals with income greater than $300,000;. 
    • a change to the eligibility criteria for the low income superannuation contribution to include payments under $20; and
    • use of levies collected by APRA to fund compensation for failure of Trio Capital Limited.    
  • APRA issued a media release on 9 May 2013 announcing it has released for consultation eight draft prudential practice guides (PPGs) for the superannuation industry. These PPGs complete "APRA's review of superannuation-related guidance material to support the implementation of the new prudential framework for superannuation". APRA has also issued a summary of the proposed treatment of existing superannuation guidance. 

             The proposed new superannuation PPGs are as follows:

There are also draft updates to the following superannuation PPGs: 

  • Prudential Practice Guide SPG 221 Adequacy of Resources;

Comments on the 8 draft PPGs are due by 4 July 2013.  APRA has also released revised versions of 2 existing cross-industry PPGs that now incorporate relevant references to the new superannuation framework. These PPGs are:

 

Further information

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.