Super changes announced in the 2010 Budget

In the 2010 Federal Budget, the Government proposed few new changes to super. Most were announced previously in response to the Henry Review. One exception was changes announced to the Government Co-contribution Scheme. Although many of these changes are yet to be legislated, details of the proposals are below.

Superannuation Guarantee to increase

The Superannuation Guarantee (SG) is proposed to gradually increase from 9% to 12% by the 2019-2020 financial year, helping Australians to save more money for their retirement.

SG age limit to increase

Currently employees age 70 and over are ineligible to receive SG contributions from their employer. It is proposed that the SG age limit will increase from 70 to 75 from 1 July 2013.

Government Co-contribution limit frozen

The Government announced the maximum co-contribution would remain at $1000 pa on a permanent basis, and that income thresholds that set a limit on
co-contribution eligibility will be frozen for 2010-2011 and 2011-2012.

Income thresholds mean the Government will match after tax contributions to super on a $1 for $1 basis up to $1000, for eligible workers earning up to $31,920 pa.

Eligible workers contributing to super after tax, and earning over $31,920 and up to $61,920 pa will receive a reduced co-contribution.

Low-income earner’s contribution

A new Government superannuation contribution proposes to boost low income earners' super accounts by up to $500 from 1 July 2012.

Those with an adjusted taxable income of up to $37,000 pa could receive a boost to their super account from the Government for concessional contributions made to their account.

Coupled with the $1000 available to eligible people through the Govenment co-contribution scheme, low income earners' super accounts could be boosted by up to $1500 a year.

Concessional contributions limit to be extended

From 1 July 2012, people age 50 and over will continue to be able to make concessional contributions of up to $50,000 pa if they have less than $500,000 in total super balances.
 

What are concessional contributions?

Concessional contributions include employer SG contributions, extra employer contributions and before tax contributions made under a salary sacrifice arrangement. They also include after tax contributions that are claimed as a tax deduction by a self-employed person.