Over 75s to keep 9% super guarantee

The Federal Government this week outlined its key measures to achieving its budget cuts.

These include a range of changes to Superannuation, including the removal of age limits on the 9% super guarantee payment for all employed Australians.  BT Head of Superannuation Melanie Evans said that BT strongly advocates the removal of the age limit for the Super Guarantee. “This mirrors what we are seeing in Australia – if people are living and working longer then their employer should continue to contribute to their super savings.”

“The retirement gap in Australian is now $900billion* and Government and industry must work together to give super members the best opportunities to increase their super balances so that they may achieve they lifestyle they desire after they stop working,” Ms Evans said.

Removing age limit for Super Guarantee

From 1 July 2013, the maximum age limit will be removed for all employed Australians. Previously workers over 75 were not entitled to be paid the 9% super guarantee. This allows workers over age 75 to keep building their retirement savings.

Extend pension drawdown relief for 2012/2013

Pension drawdown relief is to be extended for a further year in 2012/2013 with a 25% reduction for minimum payments for account-based, allocated and market-linked pensions. This allows those who have lost money in volatile markets more time to rebuild their super. Another key benefit of reduced minimum draw downs is that if you don’t need to draw down your retirement savings, it can stay in a tax free environment longer.

Dependent Spouse Tax Offset

• Offset restricted to those with spouses born before 1 July 1952
• Change won’t affect those whose spouse is an invalid or care, or receive overseas forces or civilian tax offsets

Changes to the Government co-contribution

From 1 July 2012, the matching rate will be reduced to 50 per cent, with a maximum co-contribution of $500 for people with incomes up to $31,920 in 2012-13 (with the amount available phasing down for incomes up to $46,920).

Currently the Government matches up to $1000 of an individual’s additional personal super contribution. The new rules will change the eligibility criteria for the low income super contribution which will restrict the eligibility to individuals earning 10% or more of their income from employment or carrying on a business which also applies to the super co-contribution.

This means those earning between $46,920 and $61,920 will no longer have access to benefits.

Changes to the low income superannuation contribution (LSC)

The changes will prevent the following types of individuals from receiving an LSC:

• those that receive less than 10% of their income from employment or carrying on a business
• temporary residents; and
• those entitled to a LSC of less than $20

Under the Low Income Super Contribution, individuals earning up to $37,000 a year will effectively pay no tax on their super guarantee contributions from mid-2012.

	2011/12	2012/13
Maximum income for full in Co-Contribution	$31,920	$31,920
Maximum Co-contribution	$1,000	$500
Maximum Income for partial co-contribution	$61,920	$46,920
Maximum matching rate	$1 for each $1 contributed	50 cents for each $1 contributed

Pausing indexation of contributions caps

The Government has announced pausing the indexation of superannuation general concessions contributions cap for one year in 2013/14 so it remains at $25,000. The cap is then expected to rise to $30,000 in 2014/2015.