Today's announcement of a breakthrough agreement between the Gillard Government and the resources industry on tax reform will see an historic boost to national savings and Australian's retirement incomes.
This tax reform funds superannuation reforms that will see 8.4 million Australians enjoy a major boost to their superannuation and a more comfortable retirement.
Under the Government's superannuation reforms, a 20 year old entering the workforce today, on average weekly earnings, will retire with an additional $200,000 in savings.
This is important, long-term economic reform and the biggest reforms to superannuation since the introduction of compulsory superannuation in 1992.
These superannuation reforms are the same that were announced on 2 May 2010.
Tony Abbott needs to show some leadership and support the Government's superannuation reforms or does he still hold tight to the view that he has expressed in the past that our compulsory superannuation system was a 'complete con job'?
The Government's Superannuation reforms include:
- A 12 per cent Superannuation Guarantee (SG) – commencing with a 0.25 increase in 2013-14 and 2014-15, followed by 0.5 increments until the SG reaches 12 per cent by 2019-20. The three year lead time recognises that employers and employees need to factor this into future wage negotiations.
- A low income earners Government contribution – from 1 July 2012. The Government will provide a contribution of up to $500 annually into the superannuation account of workers on adjusted taxable incomes of up to $37,000. This will provide a reward for savings for low income earners by ensuring no tax is paid on SG contributions. The Government will also retain the co-contribution scheme.
- Concessional superannuation contribution caps for those nearing retirement – from 1 July 2012. Workers aged 50 and over with superannuation balances below $500,000 will be able to make up to $50,000 in annual, concessional superannuation contributions. This measure is expected to benefit 275,000 people.
- Raising the Superannuation Guarantee age limit from 70 to 75 – from 1 July 2013. The SG age limit will be raised to 75, which for the first time means workers aged 70 to 74 to be eligible to have SG contributions made on their behalf. Around 33,000 employees are expected to benefit from this measure.
The Government's superannuation reforms are one part of the three tranches of reform to our retirement income and financial planning sector; the others are the Future of Financial Advice reforms and the Super System Review ('Cooper Review'), which the Government will shortly release for community and industry feedback.
2 July 2010