Super Federal Budget: Key Insights from Marco Mellado on ABC Radio
Superannuation is always a hot topic as the end of the financial year approaches. Marco Mellado, a superannuation specialist, recently shared his insights on ABC Radio’s “On the Money” segment with Lisa Leon. Here’s a summary of the key takeaways from the discussion, covering recent budget updates, common super questions, and strategies to optimize your retirement savings.
Budget Updates on Superannuation
Marco noted that this year’s federal budget was relatively light on superannuation changes, with most updates being pre-announced. However, two noteworthy developments stood out:
- Timely Super Payments
- Employers will now be required to pay super contributions with every wage or salary payroll instead of quarterly. This change ensures faster accumulation in employees’ super accounts and reduces the risk of missed payments.
- Tax on High Balances
- The government reaffirmed the tax policy for super balances over $3 million, which will face a higher tax rate of 30%. This measure is still under review and has a long way to go before implementation.
Key Questions and Advice on Superannuation
During the show, Marco fielded questions from callers about various superannuation topics. Below are some highlights:
- Post-Work Contributions
- The abolition of the “work test” allows individuals up to the age of 75 to contribute to their super without meeting previous employment criteria. There are two main contribution types:
- Concessional Contributions: Capped at $27,500 annually and taxed at 15% within the fund.
- Non-Concessional Contributions: Capped at $110,000 annually and not taxed within the fund.
- The abolition of the “work test” allows individuals up to the age of 75 to contribute to their super without meeting previous employment criteria. There are two main contribution types:
- Independent Financial Advice
- Sarah from Wyndham Vale raised concerns about whether it’s worth paying 1.61% to an advisor to manage her fund. Marco advised evaluating the advisor’s qualifications, historical performance, and fee structure. Good advisors can provide strategic insights and enhance fund growth but must deliver value for their fees.
- Low-Income Co-Contribution
- For individuals earning under $42,000 annually, the government contributes 50% of any voluntary super contribution, up to $500. The benefit scales down for incomes between $42,000 and $57,000. This initiative offers a significant return for low-income earners looking to boost their super.
- Transition to Pension Phase
- Questions about transitioning from the accumulation to the pension phase revealed that the current transfer cap is $1.7 million. Exceeding this limit requires commuting the excess back to the accumulation phase. Marco emphasized that this process is straightforward and supported by most funds.
- Using Super for Aged Care
- Sandra from Bendigo asked about family trusts to reduce aged care fees. Marco explained that such strategies are complex and expensive to maintain. He recommended seeking professional advice to assess their suitability on a case-by-case basis.
Additional Tips for Super Optimization
- Maximizing Contributions:
- Self-employed individuals can contribute beyond $27,500 but won’t receive a tax deduction for amounts exceeding this limit. Non-concessional contributions are capped at $110,000 per year.
- Home Sale Contributions:
- John from Geelong inquired about using proceeds from a property sale to boost super. Marco confirmed that up to $330,000 per individual ($660,000 for couples) can be contributed using the “bring-forward rule” over three years.
- Choosing the Right Fund:
- Marco emphasized that all super funds operate under the same legislative framework. Younger contributors should consider growth-oriented options but must meet age and work status requirements for withdrawals.
Conclusion
The federal budget’s changes, while minor, have implications for all Australians managing their superannuation. From maximizing contributions to selecting advisors, staying informed is key to making the most of your retirement savings.
Marco’s advice? Seek tailored financial guidance, understand the rules, and explore available government incentives to secure a comfortable retirement. Keep listening to ABC Radio for more expert insights and updates on superannuation.
