The Government knows how important it is to make superannuation as lucrative a system as possible. With the projected cost of funding older Australians expected to hit $36 billion by the end of the decade, any chance of making super more effective and helping older Australians increase their own retirement savings would be seen as a boon to future budgets.
While super changes announced in this year’s Federal Budget are minor to say the least, the Government’s voluntary superannuation contribution plans will certainly help out pre-retirees and those who have finished full-time work but have not yet fully retired.
Both concessional and non-concessional voluntary superannuation contributions can now be made by those aged 65 and 66 without a requirement to meet the work test, with those aged 65 and 66 able to make up to three years of non-concessional contributions under the bring-forward rule.
People aged up to and including 74 will also be able to receive spouse contributions without having to meet the work test requirements. Currently, workers aged 65 to 74 must work a minimum of 40 hours over 30 days (during a relevant financial year) in order to make voluntary superannuation contributions.
Also, those aged 65 and over cannot access bring-forward arrangements and those aged 70 and over cannot receive spouse contributions.
Aligning the work test with the eligibility age for the Age Pension, which is scheduled to reach 67 from 1 July 2023, and increasing the age limit for spouse contributions to 74 will certainly give older Australians more options when saving for retirement.
The Government will also make permanent the current tax relief for merging superannuation funds that is due to expire on 1 July 2020 in a measure consistent with Productivity Commission recommendations to address inefficiencies, reduce costs, manage risks and increase scale, leading to improved retirement outcomes for members.
An additional $2.3 million will be given to the Australian Securities and Investments Commission for the Superannuation Complaints Tribunal. Another $100,000 will support the establishment of a Superannuation Consumer Advocate to help consumers with policy discussions and provide information to educate and assist consumers navigate the superannuation system.
What do you think of these changes? Will they benefit you?