2020 Federal Budget
08 October 2020
What it means for your super and retirement
In the 2020 Federal Budget, the Government has announced a number of proposed changes to super, economic support payments, and planned personal income tax cuts.
Members will retain their existing super fund when they change job if they do not make a choice. However, if it’s the member’s first job and they do not make a choice, their super will go to their employer’s default fund.
Super funds offering MySuper products will be required to pass an annual performance test. Super funds that fail two consecutive annual underperformance tests will not be permitted to accept new members, and they will not be able to re-open to new members unless their performance improves. These super funds will also need to inform their members of their underperformance.
The Government will also require all super funds to act in the best financial interests of members. Super funds will be required to provide members with better information on how they manage and spend members’ money before the Annual Members’ Meetings.
A new comparison tool for MySuper products will also be made available.
Two additional economic support payments of $250 have been announced to provide further financial assistance for eligible pensioners.
Planned personal income tax cuts have been brought forward to the 2020/21 financial year
Automatically retain your super account when starting a new job
By 1 July 2021:
- If you do not nominate an account at the time you start a new job, employers will pay your super contributions to your existing fund.
- Employers will obtain information about your existing super fund from the Australian Taxation Office (ATO).
- The employer will do this by logging onto ATO online services and entering your details. Once an account has been selected, the employer will pay super contributions into your account.
- If you do not have an existing super account and do not make a decision regarding a fund, the employer will pay your super into their nominated default super fund.
New online MySuper comparison tool
By 1 July 2021, the new YourSuper tool will:
- Provide a table of simple super products (MySuper) ranked by fees and investment returns.
- Link to super fund websites where a member can choose a MySuper product.
- Show current super accounts and prompt members to consider consolidating accounts if they have more than one.
MySuper products will be subject to an annual performance test
- If a super fund is deemed to be 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.
- Super funds that fail two consecutive annual underperformance tests will not be permitted to accept new members, and they will not be able to re-open to new members unless their performance improves.
Find out more about the proposed changes to super.
Eligible pensioners will receive two additional economic support payments of $250
Two payments designed to provide further financial assistance for eligible pensioners and veterans as well as low income families and eligible concession card holders.
Personal tax cuts
- The Government announced that it would be bringing forward its planned personal income tax cuts to the 2020/21 financial year.
- The Government will provide a one-off additional benefit from the low- and middleincome tax offset (LMITO). The benefit is worth up to $1,080 for individuals or $2,160 for dual income couples.
- Low income tax offset will increase from $445 to $700.
- No changes to the Medicare levy.
Read more about the proposed changes to personal taxes.
This document was prepared in October 2020 by the Australian Institute of Superannuation Trustees (AIST) ABN 19 123 284 275. This document is of a general nature and does not take into account your personal objectives, situation or needs. Issued by LGSS Pty Limited (ABN 68 078 003 497) (AFSL 383558), as Trustee for Local Government Super (ABN 28 901 371 321). This document contains general information only