Superannuation – What has changed from 1 July 2022

Leading up to the 1st of July 2022, we were told to ‘get ready’ for the new superannuation changes that would come into effect. Now that we have entered the new financial year and changes have been implemented, I thought I’d remind you of the key reforms and what these may mean for you.

While most of these changes are quite minor, taxpayers and retirees should still be aware of the new reforms and the possible effect they may have on their superannuation balances.

The first change, and probably the most widely covered, is the increase in the superannuation guarantee (SG) percentage that employers are required to pay their employees. The SG rate has increased from 10% to 10.5% and will continue to increase by 0.5% each year until it reaches 12% on 1 July 2025.

Another major change is the removal of the $450 monthly minimum wage threshold to qualify for employer super guarantee contributions. The removal of this threshold means employers are now required to make super contributions for all their employees regardless of how much they earn. The only exemption to this rule is employees aged under 18 years of age and who work less than 30 hours per week.

Employers who are using STP compliant software should find that their software is upgraded to account for these measures.

Also changing from 1 July 2022 is an increase to the age limit for voluntary superannuation contributions. Anyone aged 67 to 74 who wishes to make a non-concessional voluntary superannuation contribution is no longer required to meet a work test to be eligible to the make the contribution. However, this is dependent on you having a total superannuation balance of under $1.7m.

On that note, the age limit for making salary sacrifice contributions into super without having to meet the work test has also been increased from age 68 to 74. There has also been an increase in the age limit to be able to access the superannuation bring forward rule from 67 to 74. This means people up to the age 74 can use up to 3 years’ worth of non-concessional (after tax) contributions caps over a shorter period.

The final measure worth mentioning is the extension of temporary reduction in superannuation minimum drawdown rates. The Government has extended the temporary reduction in the minimum pension drawdown rates by 50% for account-based pensions and similar products for the 2022/23 income years.

While changes are not major to the superannuation system, the reforms can assist taxpayers in building a significantly larger superannuation balance in retirement if used appropriately.

If you have any questions about any of the changes mentioned above or in need of general advice regarding your superannuation, please contact your client manager or our Private Wealth Team for our expert and bespoke advice. Email info@wscgroup.com.au or call us on 1300 365 125.