Budget Update

There are no major changes to superannuation in this year’s budget. I list a few small changes below. I also attached a summary of other budget measures for your reference.

Minimum pension payments set to revert

The minimum amount that was required to be paid to a member from their pension was halved in 2019-20. This was legislated to revert to the full amount from 1 July 2023. 

There was no announcement of an extension to the reduced minimum in the Budget so the amount is likely to revert to 100 per cent of the standard minimum from 1 July 2023 unless an extension is announced. This means the payments you receive from your pension may need to increase from 1 July this year.

Increase to Transfer Balance Cap

In February 2023, it was announced the Transfer Balance Cap would increase by $200,000 to $1.9 million on 1 July this year due to indexation. This is the amount you can transfer from super to start a tax-free super pension, such as an account-based pension. 

Although there has been some speculation as to whether this would remain at its current level, the fact that it wasn’t announced in the Budget suggests it will increase as expected.

$3 million super cap

As recently proposed, the government reinforced its plan to increase the tax on earnings on super balances over $3 million by 15%. This will only affect a small proportion of the population who hold larger balances in super, and the tax would only be payable on earnings over this threshold. 

The additional 15% will apply regardless of whether they are in the accumulation phase of super, or if they have retired and have commenced a super pension.

As always, feel free to call or email me if you want to discuss anything.