Key 2023 Super Legislation Changes You Need To Know!
The world of superannuation is going through a period of notable reform. Changes to Australian superannuation laws bring substantial benefits to both employers and employees.
In this update, we’ll explore the top superannuation changes in 2023 and how they will impact you. Make sure your superannuation reports align with these changes to avoid penalties.
Australians aged 55 years+ can make downsizer contributions
On January 1st 2023, the threshold for making downsizer contributions into superannuation was lowered from 60 to 55. This change allows eligible downsizers to make non-concessional contributions of up to $300,000, or $600,000 for a couple, towards their super from the sale of their family home. It’s a significant boost for those looking to ramp up their retirement savings and a move that can free up larger houses for younger families
Super Guarantee Rate Rises to 11%
From July 1, eligible workers will receive higher contributions from their employers as the superannuation guarantee rate rises from 10.5% to 11%. This increase is part of a long-term uplift plan, which is set to take the super guarantee rate from 9.5% to 12% between 2021 and 2025. This change means more money in the retirement pot for employees, and it has been designed to be affordable for employers
General Transfer Balance Cap Increase
The general transfer balance cap, which controls the maximum amount that can be moved into a tax-free retirement phase account from super, is projected to rise from its current level of $1.7 million. This adjustment is expected to happen in July, and the new cap could be as high as $1.9 million. The benefit from the larger cap will depend on a person’s transition to retirement phase.
Potential for ‘Payday’ Super Payments
There’s an ongoing push to increase the payment frequency of super guarantee contributions. Around 4.2 million workers are only paid super on a quarterly basis. Moving to a more frequent payment schedule could help reduce underpayments and boost super balances, thanks to the magic of compound interest.
How do 2023 super law changes impact Employers & Employees in Australia?
What do 2023 super law changes mean for employers?
For employers, a higher super guarantee rate and potential changes to payment schedules are steps designed to contribute to a healthier economic environment. Facilitating the downsizer contributions provides an incentive for older employees to enhance their retirement savings.
What do 2023 super law changes mean for employees?
2023 super law changes mean more money in their super accounts over time. The ability for those aged 55 and over to make downsizer contributions provides an excellent opportunity to boost super savings. The rise in the super guarantee rate will increase retirement savings, while the potential rise in the general transfer balance cap will be beneficial for those transitioning to retirement.
There are also wider changes to employment law which can indirectly impact superannuation, such as the increase to the minimum wage, changes to paid parental leave, and the prohibition of job adverts outlining unlawful rates of pay. All these contribute to a fairer workplace and can affect your overall financial position.
It is important to note the impact of these changes can vary based on various factors, including your age, salary, and the specifics of your superannuation fund.
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