The Government has successfully negotiated an agreement with the Australian Democrats to secure the passage of two key tranches of its superannuation package, Minister for Revenue and Assistant Treasurer, Senator Helen Coonan announced today.
The superannuation surcharge reduction and co-contribution measures are aimed at removing the disincentive facing those able to save for their retirement and boosting the superannuation savings of lower income earners.
“This agreement shows the Government’s willingness to listen, negotiate and deliver on key election commitments, one of which is to reform the superannuation framework to meet the challenges of an ageing Australian population,” Senator Coonan said.
“The Government offered a fair and balanced package with two-thirds of the benefit weighed in favour of lower income earners - 66:34.
“Today’s announcement goes to show what can be achieved when parties work co-operatively in the Senate to achieve outcomes on issues of growing importance to ordinary Australians.”
The maximum surcharge rate will be reduced from 15 per cent to 12.5 per cent over three years. This is a smaller reduction than the Government’s original proposal which provided for a reduction from 15 per cent to 10.5 per cent over three years.
“As its basis the measure still achieves its aim which is to encourage those who can afford to save for their retirement to do so,” Senator Coonan said.
Under the co-contribution measure those on incomes of up to $27,500 and make superannuation contributions will have their contributions matched by the Government up to $1000 annually.
The upper-income threshold for the co-contribution measure will be
$40,000.
“This is a significantly greater incentive and will be a direct
injection into the retirement savings of people earning up to $40,000,”
Senator Coonan said.
Both measures will apply to contributions made on or after 1 July 2003. Legislation to give effect to the agreement is expected to receive passage in Parliament during the current sittings.