Super news for June 2021

Pension payment relief extended for another year

The Federal Government has extended the temporary reduction in minimum pension drawdown rates by 50% for another 12 months, until the end of June 2022.

“For many retirees, the significant losses in financial markets as a result of the COVID-19 crisis are still having a negative effect on the account balance of their superannuation pension,” the Prime Minister’s office said when announcing the extension.

This means that retirees under 65 who previously had a minimum drawdown rate of 4%, prior to the pandemic, will be able to continue with the halved drawdown rate of 2% for another 12 months.

Minimum pension drawdown rates are based on age.

Super bills pass

The government’s contentious Your Super, Your Future package was passed by the Senate on 17 June, paving the way for far-reaching changes to the $3 trillion superannuation system.

The legislation will ‘’staple’’ members to the first fund they join, rather than being defaulted into a new fund each time they change jobs. A new performance test will also prevent poorly performing funds from accepting new members.

However, an amendment was passed that will delay stapling and benchmarking until November. While stapling will help reduce multiple accounts, critics argued it could also tie members to an underperforming fund or one that leaves people who move into high-risk jobs underinsured.

It hasn’t been plain sailing for the government though. It was earlier forced to amend the bill to include administration fees in its fund performance test and remove the Treasurer’s veto over super funds’ investments.

The government’s More Flexible Superannuation Bill also passed through the Senate on 17 June, with amendments.

The bill allows people aged 65 and 66 to make up to three years of non-concessional super contributions under the bring-forward rule. It was passed with amendments that include higher concessional contributions for individuals aged 65 and over and being able to recontribute COVID-19 early release super amounts.