Proposed Superannuation Changes for the Federal Budget 2018

Changes to superannuation were announced in the Federal Budget for 2018. There are some positive changes for retirees moving forward. However, these super changes are not yet enforced but it is well worth considering how your retirement plans might be affected. The proposed changes include:

Protecting your super package                                         

Fee changes

In a move designed to help stop fees eroding balances, the Government will:

  • ban superannuation funds from charging exit fees on any superannuation account; and
  • introduce a 3% annual cap on fees in superannuation accounts with balances below $6,000.


The government is proposing to change taking out life insurance inside super to an opt-in basis for people:

  • with super balances of less than $6,000
  • who are under 25
  • whose accounts which haven’t received any contributions in the last 13 months.

New ATO initiative

The Government also introduced a requirement to transfer inactive accounts with balances below $6,000 to the ATO. The ATO will then proactively seek to reunite these inactive accounts with an active account.  Again, there is likely to be some practical implementation issues which would need to be worked through.

These measures will take effect from 1 July 2019.

Pension Loans Scheme

The Pension Loan Scheme is essentially a government’s version of the reverse mortgage scheme. From 1 July 2019, eligibility will be extended to all pension-age retirees, not just those who qualify for the Age Pension, and the maximum allowable combined Age Pension and Pension Loan Scheme income stream increases to 150 per cent of the Age Pension rate. That is, a retiree can borrow against their house to receive a fortnightly income equivalent to one and half times the maximum Age Pension. Combined with the Age Pension, retirees will be able to receive income of up to $35,397 per annum for singles and $53,360 as a couple.

 Superannuation work test exemptions

  • Australians aged 65-74, with a superannuation balance of under $300,000, will now be exempt from the superannuation work test for voluntary contributions in the first year that they would otherwise fail to meet the work test requirements.
  • Currently, individuals over the age of 65 need to work a minimum of 40 hours in 30-day period. Now, an individual with a relatively low balance who doesn’t meet the work test can make superannuation contributions for an additional year.

Eligibility criteria lifted for Pension Work Bonus

The Government will alter increase the eligibility criteria for the Pension Work Bonus. The eligibility criteria have been altered to allow recipients of the Age Pension to earn up to $300 per fortnight (up from $250) without reducing their Age Pension payments. The Pension Work Bonus will also be extended to self-employed retirees, allowing them to also earn up to $300 per fortnight without reducing their Age Pension entitlements.

Self-managed superannuation funds (SMSFs) Rule Changes

  • The government is proposing to increase the maximum number of allowable members in new and existing SMSF, and small Australian Prudential Regulation Authority (APRA) funds, from four to six.
  • The Government also announced that the annual audit requirement for SMSFs would be extended to a 3-year audit for SMSFs with a good history of record keeping and compliance. This is expected to reduce the compliance burden for such SMSFs. This change will also commence on 1 July 2019.