Having an instated retirement safety net is about as Australian as meat pies and footy. And, arguably, this year’s Federal Budget has given the sacred nest egg a boost towards modernity. When the budget dropped last night, the government touted that its superannuation changes will make the system fairer for all Australians.
Treasurer Josh Frydenberg announced the new measures will give a fairer go to women, Australians aged over 60, and first home buyers.
Let’s take a look at the government’s changes to super and how they will affect Australians.
Women want super
It appears this year’s Federal Budget has at least made a decent attempt to address issues that predominantly face women. Perhaps this was a lesson learnt from the backlash following last year’s budget.
Many Australians will remember that when questioned about how women fit into the 2020/21 Budget – which was heavily focused on infrastructure, trades, and manufacturing – Prime Minister Scott Morrison said: “Women want to drive on safe roads”.
On average, women retire with less super than men. This is partly due to women being more likely to work part-time while raising children.
Prior to this budget, workers had to earn at least $450 per month to receive super, an income many part-time workers don’t earn. As 68% of part-time workers in Australia are women, the threshold was a significant disadvantage for some.
In this budget, the government has scrapped the minimum threshold for the superannuation guarantee.
When announcing the budget, Frydenberg said the measure will improve economic security in retirement for around 200,000 women.
Changes for Australians aged 60 and over
Australians’ superannuation is an important component of our retirement planning and, according to the government, the latest changes make the system far more flexible.
After this year’s Federal Budget, Australians aged 60 and over will have more flexibility to top up their super balance.
The maximum amount a person can deposit into their super accounts throughout their lifetime has increased from $1.6 million to $1.7 million, allowing Australians to enjoy their golden years with more cash in the bank.
The government has also loosened work test requirements for those aged between 67 and 74. Australians in that age bracket previously had to meet tight conditions in order to be able to make additional contributions to their super. The conditions, which included working at least 40 hours over the course of 30 days, have now been lifted.
Last night’s budget also included a key change to bulk super contributions. Previously, only Australians aged over 65 were able to make bulk contributions to their super upon the sale of their home. That age limit has now been dropped to 60. Bulk contributions are still limited to $300,000.
The government says this will not only help older Australians prepare for their retirement but also relax the housing market.
Benefits for first home buyers
Finally, Australians looking to enter the housing market for the first time can now deposit more tax-free savings into their super to help them do so.
The First Home Super Saver Scheme’s limit has been increased from $30,000 to $50,000. This intended to help first home buyers save more quickly for a larger deposit on their first home purchase.