Changes to super

August 2018

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Annual fee review

Following our annual fee review, we’re pleased to announce some changes that will become effective 1 October 2018. These are:

  • Reducing our investment switch fee from $13.10 to $11.10 for your second and subsequent switches each financial year (the first switch is free).
  • Replacing our annual $96 fixed administration fee for Accumulation 1, Accumulation 2 and Personal Accounts with an administration fee of the lesser of $96 per year or 2% of your account balance, charged monthly.

From 1 October 2018, we will also make minor revisions to our investment management and other costs deducted indirectly (from your investments before returns are applied).

Considering the funding position of our Operational Risk Reserve, the 0.06% charge currently included in the Indirect Cost Ratio (ICR) for each investment option will reduce to 0.03%; however, we will increase the Investment Fee by 0.03% for all investment options, excluding the Cash and Australian Bond options.

This means the total of the Investment Fee and ICR of the Cash and Australian Bond investment options will reduce by 0.03% per year, whereas all other investment options will remain unchanged.

These changes also apply to transition to retirement (TTR) Flexi Pensions.

There will be no indexation of DBD administration fees this year.

Reduction in Insurance Premiums

From 1 October 2018, premiums for Income Protection insurance will reduce by approximately 7% for all members. Tables outlining the annual premium per unit of Income Protection cover will be updated in our Insurance in your super booklet available at unisuper.com.au/pds.

Changes to investment options

The following table outlines changes to several of our investment options from 1 October 2018.

  Currently From 1 October 2018
Cash Risk labelling: negligible negative years in a 20-year period (Very low) Risk labelling: Less than 0.5 negative years in a 20-year period (Very low)
Australian Bond Risk labelling: two negative years in a 20-year period (Medium) Risk labelling: three to less than four negative years in a 20-year period (Medium to high)
Conservative Risk labelling: two negative years in a 20-year period (Medium) Risk labelling: two to less than three negative years in a 20-year period (Medium)
Conservative Balanced Risk labelling: two negative years in a 20-year period (Medium) Risk labelling: three to less than four negative years in a 20-year period (Medium to high)
Diversified Credit Income Risk labelling: five negative years in a 20-year period (High) Risk labelling: four to less than six negative years in a 20-year period (High)
Balanced Risk labelling: five negative years in a 20-year period (High) Risk labelling: four to less than six negative years in a 20-year period (High)
Sustainable Balanced Risk labelling: five negative years in a 20-year period (High) Risk labelling: four to less than six negative years in a 20-year period (High)
Growth Risk labelling: five negative years in a 20-year period (High) Risk labelling: four to less than six negative years in a 20-year period (High)
High Growth Risk labelling: five negative years in a 20-year period (High)

Investment objective: To achieve returns that are at least 5% p.a. more than inflation (CPI) over seven years
Risk labelling: four to less than six negative years in a 20-year period (High)

To achieve returns that are at least 4.5% p.a. more than inflation (CPI) over seven years
Sustainable High Growth Risk labelling: five negative years in a 20-year period (High)

Investment objective: To achieve returns that are at least 5% p.a. more than inflation (CPI) over seven years
Risk labelling: four to less than six negative years in a 20-year period (High)

To achieve returns that are at least 4.5% p.a. more than inflation (CPI) over seven years
Listed Property Risk labelling: five negative years in a 20-year period (High) Risk labelling: four to less than six negative years in a 20-year period (High)
Australian Shares Risk labelling: six negative years in a 20-year period (Very high)

Investment objective: To achieve returns that are at least 5% p.a. more than inflation (CPI) over seven years
Risk labelling: four to less than six negative years in a 20-year period (High)

To achieve returns that are at least 4.5% p.a. more than inflation (CPI) over seven years
International Shares Risk labelling: five negative years in a 20-year period (High)

Investment objective: To achieve returns that are at least 5% p.a. more than inflation (CPI) over seven years
Risk labelling: four to less than six negative years in a 20-year period (High)

To achieve returns that are at least 4.5% p.a. more than inflation (CPI) over seven years
Global Environmental Opportunities Risk labelling: five negative years in a 20-year period (High)

Investment objective: To achieve returns that are at least 5% p.a. more than inflation (CPI) over seven years
Risk labelling: four to less than six negative years in a 20-year period (High)

To achieve returns that are at least 4.5% p.a. more than inflation (CPI) over seven years
Australian Equity Income Risk labelling: five negative years in a 20-year period (High) Risk labelling: four to less than six negative years in a 20-year period (High)
Global Companies in Asia Risk labelling: five negative years in a 20-year period (High)

Investment objective: To achieve returns that are at least 5% p.a. more than inflation (CPI) over seven years
Risk labelling: four to less than six negative years in a 20-year period (High)

To achieve returns that are at least 4.5% p.a. more than inflation (CPI) over seven years

2018 Federal Budget

The Government announced a number of proposed changes to super in the 2018 Federal Budget. While many come into effect on 1 July 2019, one took effect on 1 July 2018. Here’s a brief overview of the changes.

HIGH INCOME EARNERS BREACHING THE CONCESSIONAL (BEFORE-TAX) CAP TO OPT-OUT OF THE SUPERANNUATION GUARANTEE (SG)

From 1 July 2018, eligible people whose income exceeds $263,157 and have multiple employers may be able to negotiate that their salary from certain employers won’t be subject to the SG. This means eligible high-income members may be able to avoid inadvertently breaching the $25,000 concessional cap as a result of multiple compulsory SG contributions.

Eligible individuals who do this may be able to negotiate to receive additional income, taxed at marginal tax rates, instead of SG contributions.

It’s unclear how this measure will apply to Defined Benefit Division members. We’ll update our website as more information becomes available.

BANNING EXIT FEES

The government proposes to ban exit fees when people change super funds, making it more affordable for those wanting to combine their super. UniSuper already doesn’t charge exit fees.

MAKING INSURANCE WITHIN SUPER OPT-IN

From 1 July 2019, default cover will be offered on an opt-in basis for under 25s. Members with account balances of less than $6,000 or who haven’t had a contribution or transfer for 13 months will have their insurance cancelled regardless of whether it’s default or underwritten cover. These members will need to be underwritten to get cover again.

This measure is intended to allow people to grow their balances faster, and protect people with low balances. Members who fall into these categories would still be able to apply for insurance cover if they choose to do so.

LIMITING FEES FOR LOWER BALANCES

From 1 July 2019, the government propose to limit administration and investment fees on super accounts with balances of less than $6,000 to 3%.

REUNITING LOST SUPER

The ATO will be given more authority to proactively transfer any lost or inactive super account with balances of less than $6,000 to people’s active super accounts.

TAX CUTS FOR LOWER- AND MIDDLE-INCOME EARNERS

The Government announced tax relief for low- and middle-income earners as part of a seven-year plan to reform personal income tax. It includes:

  • the introduction of a new non-refundable Low and Middle Income Tax Offset from 2018-19 to 2021-22, aimed at providing tax relief of up to $530 for each of those years. The offset will be in addition to the existing low income tax offset (LITO), and
  • from 1 July 2018, a change to the top threshold of the 32.5% tax bracket from $87,000 to $90,000.

The following table summarises the tax rates and thresholds from 2018-19 onwards, excluding the 2% Medicare levy.

Tax rates and thresholds
Rate 2018-19 to 2021-22 2022-23 and 2023-24 2024-25 onwards
0% $0 - $18,200 $0 - $18,200 $0 - $18,200
19% $18,201 - 37,000 $18,201 - 41,000 $18,201 - 41,000
32.5% $37,001 - 90,000 $41,001 - 120,000 $41,001 - 120,000
37% $90,001 - $180,000 $120,001 - $180,000 N/A
45% $180,001+ $180,001+ $200,001+

Legislative update

SUPERANNUATION COMPLAINTS TRIBUNAL AND THE AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY

From 1 November 2018, the Australian Financial Complaints Authority (AFCA) will replace the Superannuation Complaints Tribunal (SCT), the Financial Ombudsman Service and the Credit and Investments Ombudsman.

This means you can still lodge a complaint with the SCT (www.sct.gov.au) and get information about any open matters with them up until 1 November, after which AFCA (www.afca.org.au) will be the only body that can resolve superannuation complaints. Go to unisuper.com.au/complaints for more information.

Important updates

AMENDMENT TO UNISUPER’S REGULATIONS

An amendment made to the UniSuper Regulations, the document which governs how the fund operates, took effect on 1 March 2018. The change to them removes the requirement for seven days of leave without pay that currently applies to members claiming inbuilt Temporary Incapacity benefits.