2020 Federal Budget and your super and retirement

The 2020 Federal Budget focuses firmly on plans to create jobs for Australians and rebuild the economy, following the impacts of the COVID-19 pandemic. It also includes several proposals aimed at making super work harder for members.

Discover the key suggested changes to super and what they may mean for you below. (It’s important to remember that these changes will need to be legislated to come into effect.)

  • The introduction of a new YourSuper comparison tool.
  • Super funds will be subject to an annual performance test.
  • Your super will follow you to your new job (also known as ‘super stapling’).

 

An easier way to compare super funds with the YourSuper comparison tool

To help you compare the performance and fees of super funds, and select the fund that’s best suited to your needs, the Australian Tax Office (ATO) will introduce a new online super comparison tool. Called YourSuper, this super comparison tool will be introduced by 1 July 2021 and will:

  • Provide you with a table of super products ranked by fees and investment returns.
  • Link to fund websites.
  • Show all current super accounts and prompt you to consider consolidating accounts if you have more than one account.

The YourSuper comparison tool is expected to help you find a fund that performs well and be better off in retirement.

 

Identifying underperforming super funds with an annual performance test

To make sure that the retirement savings of members are protected from underperforming funds, by 1 July 2021, MySuper products will be subject to an annual performance test by the Australian Prudential Regulation Authority (APRA).

If a fund is identified as being underperforming, it will need to inform its members of its underperformance by 1 October 2021 and provide information on the YourSuper comparison tool. Underperforming funds will be listed as underperforming on the YourSuper comparison tool until their performance improves.

Funds that fail 2 consecutive annual underperformance tests will not be permitted to accept new members. These funds will not be able to re-open to new members unless their performance improves.

Switching your super from an underperforming fund to a better performing fund could help you boost retirement savings. For a typical worker in their 20s, being in an underperforming fund during your working life could mean you may be up to $87,000 worse off at retirement. For someone in their 50s, it means you could be around $60,000 worse off at retirement1.

AustralianSuper members can rest assured knowing they're already with the nation’s top performing super fund over 5 and 10 years2.

 

Stapling - helping you take your existing super to your new job

To help limit the number of duplicate super accounts, by 1 July 2021, new accounts will no longer be created every time you move jobs. Instead, an existing superannuation account will be ‘stapled’ to you. The government has proposed the following measures:

  • If an employee doesn’t nominate an account at the time they start a new job, employers will pay their super contributions to their existing fund.
  • Employers will access information about the employee’s existing super fund from the ATO.
  • The employer will do this by logging onto ATO online services and entering the employee’s details. Once an account has been selected, the employer will pay super contributions into the employee’s account.
  • If an employee doesn’t have an existing super account and doesn’t choose a fund, the employer will pay the employee’s super into their nominated default super fund.

 

Other key Federal Budget announcements

Additional payments for pensioners

Following on from the $750 COVID-19 payments provided earlier this year, eligible recipients of certain government benefits, such as those on the Age Pension, will receive 2 extra $250 Economic Support Payments, one from November 2020 and one in March 2021.

Personal tax cuts

To put more money in the pockets of Australians, the government announced the lowering of personal income taxes consistent with their 2018-19 plan. Stage 2 personal income tax cuts will now be brought forward 2 years from July 2022 to July 2020. In dollar terms, this means that lower and middle-income earners will get up to $2,745 back for singles and up to $5,490 for 2 income families, compared to 2017-18. Those earning $40,000 a year will pay 21% less tax this year compared to 2017-18 and those on $80,000 around 11% less.

A summary of the income tax rates effective from 1 July 2020

Rate (%) Current thresholds (from 1 July 2019)
Income range ($)
Thresholds from 1 July 2020 (Stage 1)
Income range ($)
Tax free 0-18,200 0-18,200
19 18,201 – 37,000 18,201 – 45,000
32.5 37,001 – 90,000 45,001 – 120,000
37 90,001 – 180,000 120,001 – 180,000
45 > 180,000 > 180,000

 

Investment in infrastructure

On top of the measures announced during the COVID-19 pandemic, an additional $14 billion has been allocated for new and accelerated infrastructure projects over the next 4 years. This aims to support an estimated 40,000 jobs during their construction.

READ MORE: INVESTING TO GROW YOUR SUPER AND THE AUSTRALIAN ECONOMY

Aged care

An increase of funding, including $1.6 billion for 23,000 additional home care packages and $400 million to improve the aged care system.

Benefits for business

The 2020 Federal Budget includes initiatives for businesses to support employment and growth, such as:

  • The removal of fringe benefit tax for retraining and reskilling provided by employers for employees redeployed into a different role in the business.
  • Writing off the full value of eligible assets first used or installed by 30 June 2022 for businesses with a turnover of less than $5 billion.
  • Carrying back losses incurred in the 2019-20 to 2021-22 years for companies with turnover of less than $5 billion.

 

EXPLORE: AUSTRALIAN SUPER FOR YOUR BUSINESS

 

Source: Treasury’s YourFuture, Your Super fact sheet (PDF)

*Based on the AustralianSuper Balanced investment option compared to the SuperRatings Fund Crediting Rate Survey – SR50 Balanced (60–76) Index, periods to 30 June 2020. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.

^Personal financial product advice is provided under the Australian Financial Services Licence held by a third party and not by AustralianSuper Pty Ltd. With your approval a fee may be charged if a Statement of Advice is provided.

 This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement available at australiansuper.com/pds. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.


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