Minister for Financial Services and Superannuation Bill Shorten today confirmed that the Gillard Government will introduce legislation to deliver two key measures which will help drive the adequacy of retirement savings in Australia.
The measures, announced in April, will encourage Australians to contribute more to their superannuation later in life and will allow Australians to withdraw or retain excess concessional contributions without penalty.
"The Government believes that it is important to allow people who have not had the benefit of the Superannuation Guarantee for their entire working lives to have the ability to contribute more to their super as their retirement age approaches."
The Government will bring forward the start date for the new higher concessional contributions cap to 1 July 2013 for people aged 60 and over. Individuals aged 50 and over will be able to access the higher cap from 1 July 2014.
"This means Australians reaching retirement age during the next financial year can contribute up to $10,000 more to their super at the concessional tax rate," Minister Shorten said.
An exposure draft of the legislation to bring forward the start date of the new concessional contributions cap has been released today for consultation is available on the Treasury website.
Separately, the Government will seek to introduce legislation which allows individuals to withdraw any excess concessional contributions made from 1 July 2013 from their superannuation fund without penalty.
In addition, the Government will tax excess concessional contributions at the individual's marginal tax rate plus an interest charge, rather than the top marginal tax rate.
"This reform will ensure that individuals are taxed on excess concessional contributions in the same way as if they had received that money as salary or wages and had chosen to make a non-concessional contribution."
At the moment, concessional contributions that are in excess of the annual cap generally are effectively taxed at the top marginal tax rate (46.5 per cent). This is a severe penalty for individuals with income below the top marginal tax rate.
"These measures will improve the fairness, adequacy and efficiency of Australia's world-class superannuation system for the future," Minister Shorten said.