New laws designed to protect your super from 1 July 2019

New laws designed to protect your super from 1 July 2019

To protect the super balances of all Australians being eroded by unnecessary fees and costs, the Federal Government has passed the “Protecting Your Super” reforms (formally titled Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018). This new legislation will apply from 1 July 2019 and includes cancelling insurance for inactive members, changes to fees, and new powers for the Australian Taxation Office (ATO) to transfer and hold inactive, low-balance accounts.

Cancelling insurance

To prevent inactive super account balances being unnecessarily reduced by insurance premiums, super funds will be required to cancel some members’ insurance where their account has become “inactive”.

An inactive super account is one where no contributions or transfers/rollovers from other super accounts have been received within 16 months or more.

Changes to fees

Fees will change in two ways from 1 July 2019:

  1. Exit fees, including fees for partial withdrawals, will be removed from all super accounts.
  2. There will also be a 3% cap on administration and investment fees on super accounts with balances below $6,000.

The ATO: transferring and holding inactive accounts

If your account has been inactive for 16 months and you have a balance less than $6,000, it will be transferred to the ATO. They will attempt to transfer your super to an active super fund (if you have one, and where the transfer would take your total balance to $6,000 or more).

You won’t be charged any fees by the ATO, and your super will earn interest based on the consumer price index (CPI) while they hold it.

What can you do?

You can keep your insurance cover by organising for a contribution* (either an employer or personal) to go into your fund, or by making your request in writing. You’ll need to do this every 16 months even if you’ve previously requested to keep your cover.

To stop your account being transferred to the ATO, you have a few more options. Either:

  • Combine your super accounts so your balance is more than $6,000
  • Make a contribution or speak to your employer about contributing to your account*
  • Change your insurance, or
  • Nominate a binding beneficiary for your super (if you haven’t done this already).

Your account also won’t be transferred to the ATO if you’ve changed your investment option in the last 16 months.

To see if you have any inactive accounts, you can check by registering for the ATO online services on your mygov account.  This will allow you to do the following:

  • see details of all your super accounts, including any you may have lost or forgotten about.
  • find any super held on your behalf by the ATO when your super fund, your employer or the government couldn't find an account to deposit your super to.
  • consolidate your super into a single fund.

* To be eligible to make contributions into super once you are over the age of 65, you must have been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days during the same financial year in which the contributions are made.


Amy Bignell, Senior Accountant


Tags: Superannuation