The federal budget helps low paid workers and older Australians save for their retirement under changes to superannuation rules.
Super Changes For Low Paid, Older Workers: Australia’s Budget
CANBERRA, Australia — Australia’s Treasurer Josh Frydenberg’s third budget aims to assist low-paid workers and older Australians save for their retirement while offering an incentive for those looking to downsize their home when they reach 60.
From July 1 next year, the AU$450 ($351) per month threshold for compulsory superannuation will be removed, meaning employers will have to pay super to low-paid workers, such as part-time staff and casuals.
“This will improve economic security in retirement for around 200,000 women. Our plan will also make it easier for Australians to prepare for retirement and to be more secure once in retirement,” said Frydenberg while introducing the budget.
“We will improve flexibility by no longer requiring older Australians to meet a work test before they can make voluntary contributions to superannuation.”
The federal government’s recent retirement income review estimated such an initiative would see about 300,000 individuals receive additional super guarantee payments each month, 63 percent of whom are women.
From the same date, the government will allow individuals aged 67 to 74 years to make or receive non-concessional or salary sacrifice superannuation contributions without meeting the so-called work test.
Currently, individuals in this age bracket can only make voluntary contributions or receive contributions from their spouse if they are working at least 40 hours over a 30-day period in the relevant financial year.
“Removing the requirement to meet the work test when making non-concessional or salary sacrifice contributions will simplify the rules governing superannuation contributions and will increase flexibility for older Australians to save for their retirement through superannuation,” the budget papers say.
Also, from July 1, 2022, the government will reduce the eligibility age from 65 to 60 for those wishing to make contributions to their super from downsizing to a smaller home.
The downsizer contribution allows people to make a one-off, post-tax contribution to their super of up to AU$300,000 ($234,119) per person from the proceeds of selling their home.
Both members of a couple can contribute in respect of the same home.
We will also enhance the Pension Loans Scheme by providing immediate access to lump sums of around AU$12,000 ($9,367) for singles and AU$18,000 ($14,051) for couples.
Under the Coalition, Australian seniors will always have more control over their money.
“This measure will allow more older Australians to consider downsizing to a home that better suits their needs, thereby freeing up the stock of larger homes for younger families,” the budget papers say.
(Edited by Vaibhav Vishwanath Pawar and Pallavi Mehra)