26 May 2021 — articles

super changes you should know about

Written by bongiorno group

There are some important changes coming to superannuation and they could have a major impact on your personal finances.

1. Rising contribution rates

As of 1 July 2021, the employer super contribution rate will increase from 9.5% to 10%. The rate will rise again by 0.5% each year until it reaches a 12% contribution rate on 1 July 2025. While these super rate increases have generated a measure of political controversy, in our view it is unlikely they will be repealed.

2. Concessional versus non-concessional super contributions

Concessional contributions are taxed at a flat rate of 15% once they arrive in your super account.

A non-concessional contribution is ‘after-tax’ money put into super with no tax deduction claimed.

Types of concessional superannuation contributions include:

  • compulsory employer contributions to employee super (superannuation guarantee contribution)
  • employee salary sacrifice contributions to super
  • personal contributions to super that are claimed as a tax deduction

3. Rising non-concessional contribution rates

The cap on non-concessional super contributions is also scheduled to rise by 10% from the current $100,000 per year limit to $110,000 per year.

A non-concessional contribution is extra money put into super after tax for which no deduction is claimed.

4. Increase to the non-concessional balance limit

The total superannuation balance limit for non-concessional contributions will increase through indexation on 1 July 2021 from $1.6 million to $1.7 million.

This means if the total worth of your super portfolio is less than $1.6 million ($1.7 after 1 July 2021), you can make non-concessional contributions to your fund. This increase in the ‘total superannuation balance limit’ will also increase eligibility for the spouse tax offset and the government co-contribution.

5. Bring forward more

Superannuation account holders under 65 years with a total balance of less than $1.7 million will be able to make three years’ worth of non-concessional contributions in a single year. With the non-concessional limit increasing to $110,000 per year, it will become possible to ‘bring forward’ up to $330,000 in non-concessional super contributions over a single year. In the case of couples, you can double that amount for a total of $660,000. Also, legislation currently before the Australian Parliament would increase that age limit to 67 years of age.

6. Carry forward unused super contribution caps

As of 1 July 2018, any concessional superannuation contribution caps that you haven’t utilised over the 18/19 and 19/20 financial years can be used to ‘catch up’ and be carried forward to your current year’s concessional super cap.

  • This carry forward provision is restricted to superannuation balances of less than $500,000.
  • The maximum contributions cap is currently $25,000 per year. This will increase to $27,500 from 1 July 2021.


Isabella has a total superannuation balance of $248,000. She’s made the following superannuation contributions over the past two years:

Contribution example:

Financial Year Used Cap Available ‘catch up’ amount

2018/2019 $15,000 $10,000

2019/2020 $20,000 $5,000

Therefore, in the 20/21 financial year, Isabella has available as a catch up superannuation contribution of:

  • $10,000 catch up from 18/19
  • $5,000 catch up from 19/20
  • $25,000 available for the 20/21 financial year*

*Not including any unused cap for the 20/21 financial year.

7. Moving more into tax-free pensions

The ‘transfer balance cap’ that limits the amount of super you can transfer into the tax-free pension phase will increase on 1 July 2021 by $100,000 to a total of $1.7 million.

This increase won’t apply to those who have already accessed the existing cap of $1.6 million. The new increased $1.7 million cap, however, will apply to anyone who hasn’t yet drawn a pension from their super.

Anybody who has commenced drawing a pension from their superannuation, but hasn’t accessed the full amount of the cap, will receive a proportional increase to their transfer balance cap.


  • Jack began to draw a pension of $800,000 under the old limit of $1.6 million, leaving an unutilised amount – his remaining ‘cap space’ – of $800,000, equal to 50% of the transfer balance cap.
  • Under the new limit, Jack’s cap space would also grow proportionally – by 50% of the $100,000 increase – meaning that his new transfer balance cap would now rise to $850,000.

8. Defined benefit pensioners

Some defined benefit pensions qualify as capped defined benefit income streams. This framework limits the amount of tax-free income a pensioner can receive, and it may reduce the entitlement to the 10% offset on any untaxed element.

For these defined benefit pensioners, their income cap will rise on 1 July 2021 from $100,000 to $106,250. This may generate a small increase in pension payments as the amount of tax withheld by the defined benefit super fund is reduced.

9. The end of COVID-19 tax relief

In response to the COVID-19 pandemic, the minimum annual pension payment that account-based pension holders were obligated to take was cut by 50%. As of 1 July 2021, those payment levels will revert to pre-COVID-19 levels:

pre-COVID-19 levels:

  • 4% of the account balance for those younger than 65 years
  • 5% for those aged from 65 to 74
  • 6% for those aged 75 to 79
  • 7% if aged 80 to 84
  • 9% if aged 85 to 89
  • 11% if aged 90 to 94
  • 14% if aged 95 or older


  • As a 76-year-old with a super balance of $500,000, Helen would be obligated to take pension payments of at least $30,000 per year.
  • As a 91-year-old with a super balance of $300,000, Peter would be obligated to take pension payments of at least $33,000 per year.


Vanessa Smith BBus (Acc), CFP®, Adv Dip FS (FP), Cert IV FMB

Senior Consultant, Bongiorno Group

Anthony. S. Bongiorno BCom, DipFP, CFP®, FIPA, CTA, SSA™, Cert.IV FMB

Senior Director and Founding Partner, Bongiorno Group

For further information or to book an exclusive AMAV member complimentary meeting, please phone 03 9863 3111 or email amav@bongiorno.com.au

As this general advice has been prepared without taking account of your objectives, financial situation or needs, you should consider the appropriateness of this advice before acting on it. If this general advice relates to acquiring a financial product, you should obtain a Product Disclosure Statement before deciding to acquire the product.


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