Matthew Linden unpacks the many historic changes happening to super, especially for people on low incomes.
Super is being shaken up and the beginning of the momentous changes started this month with the passing of two historic new laws. The first means tax breaks for low income earners and the second will affect us all, as super contributions increase from 9 to 12 per cent.
Matthew Linden, the Chief Policy Adviser for the Industry Super Network, tells 3Q the changes mean retirement savings will increase by more than $50,000, even for low income earners.
The new legislation means low income earners (earning less than $37,000) will not have to pay tax on their super contributions. A rebate of $500 annually will be awarded to them to offset the 15 per cent tax rate they previously paid.
And with the mining tax legislation passed, super contributions will now rise from 9 to 12 per cent over the next eight years.
Bills have also been introduced to give safeguards for financial advice consumers, for the first time requiring financial planners by law to act in the best interests of their clients.
The Gillard Government’s other initiative to assist all workers with greater access to super information is through the Stronger Super package which will come into effect in 2013.
This initiative is designed to cut fees on super investments by up to 40 per cent and to give members a better handle on their super fund.
Recent studies have shown a public disengagement with super – even after 20 years of compulsory super and even amongst those on the verge of retirement.