As we approach the end of 2023 and anticipate the arrival of 2024, the superannuation landscape has undergone several legislative changes since the start of the financial year.
These adjustments could influence your superannuation strategy as you enter the new calendar year, so staying informed about them is important.
Here is a recap of what has been introduced since the 2023/24 financial year commenced.
Super Guarantee Percentage Increase:
On July 1, 2023, the Super Guarantee (SG) percentage rate rose from 10.5% to 11%. Employers are required to contribute additional funds to their employees’ super accounts in accordance with this higher SG rate. The scheduled increases indicate a further rise to 11.5% on July 1, 2024, and a final increase to 12% on July 1, 2025, with the rate remaining stable unless additional legislative changes are introduced.
Return to Standard Account-Based Pension Minimum Drawdowns:
The temporary reduction in account-based pension minimum drawdown percentages, in effect from July 1, 2019, to June 30, 2023, concludes on July 1, 2023. Account-based pension holders may notice a significant uptick in their minimum drawdown requirements compared to previous years due to the conclusion of this measure.
Indexation of the Transfer Balance Cap:
The transfer balance cap, limiting the amount of super that can be transferred into tax-free retirement pensions, increased from $1.7 million to $1.9 million on July 1, 2023. Individuals with previous super transfers into the retirement phase should be aware of their unique transfer balance cap. This adjustment may provide opportunities for those unable to make non-concessional contributions in prior years to consider doing so in the 2023–24 financial year.
Increase to Age Pension Age:
Starting from July 1, 2023, the Age Pension Age rises to 67 for individuals born on or after January 1, 1957. If you were born before this date, your Age Pension Age remains unchanged. Once reaching Age Pension Age, meeting Australian residency requirements and maintaining income and assets below specified cut-off points are prerequisites for entitlement.
In conclusion, staying vigilant and informed about these changes is the key to making well-informed decisions concerning your superannuation and retirement plans. As we embark on the journey into 2024, adopting a proactive stance in comprehending and adapting to these adjustments will undoubtedly pave the way for a more secure and stable financial future.