2020 Federal Budget recap
In what some commentators are calling the most important Federal Budget in living memory, Josh Frydenberg’s second Budget as Treasurer aims to kickstart the economy after COVID-19. It’s big on jobs and support for Australians, and includes announcements that will change the way super works for new members and those changing jobs.
At the time of writing, any Budget announcements are proposals only and shouldn’t be considered final until any legislation passes. We’ll keep you updated as developments occur.
Breaking down the key announcements
COVID-19 temporary early release of super (previously announced on 22 March 2020)
The Budget formally incorporates the fiscal impacts of the previously announced ‘COVID-19 early release of superannuation’ scheme. Individuals in financial stress can access up to $10,000 of their super in the 2020-21 financial year if they apply before 31 December 2020.
Read more about early release of super.
COVID-19 temporary reduction of super minimum drawdown rates (previously announced on 22 March 2020)
To support retirees, the Government has reduced the annual minimum drawdown requirements for pension payments by 50% for the 2020-21 financial year.
Read more about minimum drawdown rates and your options.
‘Your Future, Your Super’ measures
A super account that follows you
If you’re an existing member of a super fund, the Government has proposed that from 1 July 2021 your super account will follow you whenever you start a new job. It is intended that this will prevent the creation of multiple unwanted accounts over time.
This measure implements a recommendation from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
New YourSuper comparison tool
For people entering the workforce for the first time or wanting to review their super, the Government has proposed building a new online comparison tool, YourSuper. The tool, which will be available from July 2021, is intended to empower people to compare and select a MySuper product.
It’s not yet clear how these measures will interact with the recently-passed Your Superannuation, Your Choice measures, or how it will impact defined benefit members.
Increased transparency and accountability of super funds
The Government will legislate a stricter requirement for trustees to ensure that expenditure is motivated solely by the best financial interests of members to apply from 1 July 2021. Funds will also be required to disclose more detail about how they’re spending members’ money. Funds will need to provide key information to members ahead of Annual Members’ Meetings.
The aim is to ensure that trustee actions are consistent with the maximisation of members’ retirement savings. In 2019-20, UniSuper maintained its position for its super and pension products as one of the lowest fee providers.
MySuper products to be performance-tested annually
The Government intends to give powers to the Australian Prudential Regulation Authority (APRA) to deal with underperforming funds. The powers will require the fund 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 two consecutive annual underperformance tests won’t be permitted to accept new members, and will be unable to re-open to new members unless their performance improves.
Additional funding to address serious and organised crime
The Government will provide funding to the Australian Taxation Office (ATO) to target serious and organised crime in the tax and super systems.
This extends the 2017-18 Budget measure, Additional funding for addressing serious and organised crime in the tax system, by a further two years to 30 June 2023.
Stay in the know
Tune in to our Federal Budget podcast with our Policy & Advocacy Manager, Benedict Davies for a recap of the Budget and breakdown of the signature super announcements.
For more on this year’s budget and how it may affect you, keep an eye out for updates on our website as they become available, and check out the official Budget website.
If you have questions about the Budget announcements and their impact on your personal financial situation, you can make an appointment with a financial adviser from UniSuper Advice.