The Government is tonight announcing a package of measures designed to provide Australians with greater incentives to save for their retirement.
The Government will increase the incentive for low to middle income Australians to make additional voluntary savings through the superannuation system. This measure will cost $2.1billion over the next four years.
From 2004-05, the maximum Government co-contribution will be increased from $1,000 to $1,500, to match a $1,000 personal contribution. The maximum Government co-contribution of $1,500 will be available to all employees who make personal contributions with incomes below $28,000. The income threshold was previously $27,500. Above this amount, the maximum co-contribution will reduce by 5 cents for each dollar of income to phase out completely at $58,000. Currently the co-contribution phases out completely at an income of $40,000.
The Government will further lower the superannuation surcharge rate to 12.5per cent in 2004-05, 10per cent in 2005-06 and 7.5per cent for 2006-07 and following years.
This measure will cost $610million over the forward estimates period and will further improve the incentives to contribute to superannuation.
Over three quarters of the benefits provided by enhancing the Government’s co-contribution scheme and reducing the superannuation surcharge will go to low to middle income individuals.