What’s changing with super this financial year?

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  • What’s changing with super this financial year?

At the Federal Budget in May this year, the Treasurer suggested a raft of changes to super which have now been passed in Parliament. The changes proposed will help us all to build on our super and secure a comfortable retirement.

Below, we take a look at the changes that will take affect from 1st July 2021.


Increasing the super guarantee to 10%

At the time of writing, the super guarantee (the minimum required amount your employer must pay into your super) is 9.5% of your salary. This will increase to 10% as of 1st July 2021 and is set to rise over the coming years.

You may have heard about this one in the news recently, as some employees will be forced to pay the 0.5% difference. This is determined by your employment contract, and it’s important to note that your contract may be different to that of your colleagues. The key to finding out if you’ll be paying more is to look at the wording regarding superannuation.

If the contract states that super is to be paid on top of your base salary, then your employer will pay the full 10%.

If your contract states that super is part of your total salary and benefits package, then you may find this will be deducted from your salary and your take home pay will be slightly reduced.

Increases in concessional and non-concessional contributions to super

Learn more about contributions here.


Increases in super transfer balance cap

The transfer balance cap is the total amount of super you can transfer into your retirement products such as pensions and annuities. This will cap will increase from $1.6 million to $1.7 million.

Your super will follow you from job to job

We’ve all done it, you start a new job and you go with the employer’s default fund. Recognising that most of us don’t think about consolidating until we near retirement age, new legislation means your super fund will be attached to you as you change employers. This will begin on 1st November 2021, if you change jobs after that date you will keep your current super account.

Generally, this will be the first fund you’re signed up for, but you can change this if you move to a new super fund that better suits your needs.


Minimum pension drawdown

The government has also extended the temporary reduction in pension minimum drawdown rates for another year, see below for the rates for next financial year.

Age:Temporary Reduced Minimum
Under 65 2%
65 – 742.5%
75 – 79 3%
80 – 843.5%
85 – 894.5%
90 – 94  5.5%
95 +7%

Bring forward rule

Non-concessional contributions that go over the cap (currently $100,000) can, if you’re eligible, be included in your contributions for future years. The age limit currently sits at 65, this will be extended to those aged 67.


Removal of $450 monthly income threshold

If you are earning less than $450 per month from a single employer, you are currently not entitled to any super guarantee payments. This threshold will be removed so that all employees, regardless of income, will receive their super guarantee payments. This is great news for casual and part time workers.

First Home Super Saver Scheme

The First Home Super Saver Scheme allows you use your voluntary contributions super to buy a house (with conditions of course), the amount you can withdraw will increase from $30,000 to $50,000.

Removal of the Work Test

For those aged 65 – 74 and still working, conditions (known as the work test) were in place if you wanted to contribute to your super. This test has now been removed allowing more flexibility for those who wish to continue working well past the usual retirement age.

Downsizer scheme

Downsizer contributions can help if you sell your family home to ‘downsize’, giving you the opportunity to put the money into super and prepare for retirement. Previously, this was only available to those aged over 65, the age limit has now been reduced to 60.

Pension Loans Scheme

There are two proposed changes to the Pension Loans Scheme (similar to a reverse mortgage). The first is that instead of receiving regular payments, you can request up to two lump sum payments over a 12-month period.

The second is the introduction of a no negativity guarantee, meaning you will never owe more than the value of the property when borrowing through the scheme.

Outdated SMSF products

There are a number of outdated and inefficient super and retirement SMSF products in our system. Due to some of the laws passed over the years, customers have been unable to sell or withdraw their funds and find better, cheaper alternatives. The proposal put forward is to be able to withdraw and close these funds without penalty (for a period of two years).

Contribution to your SMSF while travelling

If you’re working or studying overseas and want to make contributions to your SMSF you can currently do this for a maximum of two years, it has been proposed this is increased to five years.


Other changes include super funds being required to be more transparent about the performance of their funds, and continued funding for Super Consumers Australia – an advocacy group protecting the rights of the super clients.

These changes are of benefit to most Australians, and hopefully will see a boost to all our super funds resulting in better retirements for all. If you have any questions about the changes and how they affect you, please don’t hesitate to contact us.

It is very important that you understand that the information above is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. It is also worth noting that the Australian financial and taxation system is ever changing, and the information above may no longer be relevant. Again, we suggest seeking professional advice from a financial adviser before proceeding.

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