Let’s have a look at how the Government is planning to tweak the super system, as per the 2019 Budget.
First off, the Budget papers noted the Government has agreed to the amendments to the Protecting Your Super package, which comprise:
Delays to insurance deadlines
The Government said it is delaying the start date for ensuring super funds only offer insurance on an opt-in basis - at least for accounts with balances of less than $6000 or new accounts belonging to under-25s - to October 1st.
The changes, the Government said, "will protect the retirement savings of young people and those with low balances by ensuring their superannuation is not unnecessarily eroded by premiums on insurance policies they do not need or are not aware of."
The Government said the changes will "also reduce the incidence of duplicated cover so that individuals are not paying for multiple insurance policies, which they may not be able to claim on. These changes will not prevent anyone who wants insurance from being able to obtain it — low balance and young members will still be able to opt‑in to insurance cover within superannuation."
Changes to super for older Australians
Those aged 65 to 66 will be allowed to make voluntary super contributions without meeting the work test from 1 July 2020. On top of that, they will "also be able to make up to three years of non-concessional contributions under the bring-forward rule."
Spouse contributions are now eligible up to age 74.
Tax relief for super fund mergers
The tax relief for merging superannuation funds, due to expire in July 2020, will be made permanent.
The Government said this will "[ensure] superannuation fund member balances are not affected by tax when funds merge. It will remove tax as an impediment to mergers and facilitate industry consolidation, consistent with the recommendation of the Productivity Commission’s final report, Superannuation: Assessing Efficiency and Competitiveness."
This indicates the Government is advocating further super fund consolidation, given that the Budget papers say the process will "address inefficiencies by reducing costs, managing risks and increasing scale, leading to improved retirement outcomes for members."
Wrapping it up
There appear to be two prongs to the 2019 Budget's super measures: one, to make it easier for older Australians to contribute to their super to ease the Age Pension burden, and to facilitate further fund consolidation as per some of the recommendations made by the Productivity Commission.
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