On 29 November, in its Mid-Year Economic and Fiscal Outlook, the Government announced plans to makes change to super and super pensions.
Here’s a summary of what is changing and how it might affect you.
Co-contributions
From 1 July 2012, the Government will refund the tax payable on superannuation contributions, including the superannuation guarantee, if you earn up to $37,000.
As a trade-off, the current co-contribution matching rate will be reduced by 50%. This will be up to a maximum of $500 on a $1,000 contribution if you earn up to $31,920 in 2012-13, with the co-contribution phasing out at when your income is $46,920.
Overall, the Government says that this, along with some changes to eligibility, will make the co-contributions scheme available to more low-income earners, benefiting around three times as many people.
A ‘pause’ in indexing of the before-tax contributions cap
The Government has decided to put a one-year hold in 2013-14 on indexation of the before-tax contributions cap, keeping it at $25,000 for those under 50 and $50,000 for those over 50. Indexing will start again in 2014-15.
Removing the Superannuation Guarantee (SG) age limit
In a widely welcomed move, the Government has removed the SG maximum age limit from 1 July 2013.
This means if you are working and aged 70 or older, you will now be eligible for the compulsory SG contribution from your employer.
Reduction in the minimum payment amounts for account-based pensions
The Government will extend its current drawdown relief for retirees for another year by reducing the minimum payment amounts for super pensions like the AustralianSuper Pension by 25% for 2012-13.
This is designed to help retirees with these pensions through the current volatile market. The Government anticipates around 125,000 retirees will benefit from this decision.
For more information
For more information about these proposed changes to super, download the Government’s release on the Mid-Year Economic and Fiscal Outlook.