It is a well-known fact that most Australians are under-funded for their later years, whether they plan to work well beyond 65 or 70 or older. So why is Treasurer Swan making it so difficult for people to save for retirement?
Put simply, about 70 per cent of today’s 50 and 60-year-olds will be living on a full or part Age Pension in the next 10 or so years. The full Age Pension with supplements equals about $18,000 per annum. This is $3,000 short of what the Australian Superannuation Funds Association (ASFA) describes as a modest standard of living – and that assumes you own your own house. It is also well documented that older women, in particular, have very low superannuation savings, largely due to working in traditionally lower paid sectors combined with their fragmented work histories because of family obligations.
So for a Labor Government to hit older people when they are already vulnerable is both surprising and disappointing. The co-contribution cut off was $61,920 – roughly equating to the median salary for an average worker. It has now had 25 per cent sliced off – so you need to earn $46,920 or less before you can take advantage of the co-contribution. The amount contributed by the government has also been halved – from a maximum of $1,000 to a maximum of $500. So it’s not really a co-contribution at all – it simply does not match, apples for apples what you put in. It ‘half’ matches your contribution.
Where is the incentive for those on low salaries to save hard for their retirement? Why should ordinary workers scrimp and save to lock up money in super if the Government does not seem to consider this a priority?
The only thing you can do is to take advantage of the old rules before they change. The new co-contribution measures take effect from 1 July 2012. So before this tax year ends, if you have the ‘hard-earned’ to invest, why not think about putting it into super to get the maximum Federal Government contribution you are likely to see for years to come?
What do you think? Is Kaye just getting mad about nothing? Or is the Federal Government saying one thing but delivering another when it comes to retirement savings?
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