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| Fairfax, 4 September 2014 |
The government has announced it will defer the proposed increases in the compulsory superannuation guarantee amounts to be paid in Australia.
What are the changes?
| Rate under new deal (%) | Previous law (%) | |
|---|---|---|
| 2014/2015 | 9.5 | 9.5 |
| 2015/2016 | 9.5 | 10.0 |
| 2016/2017 | 9.5 | 10.5 |
| 2017/2018 | 9.5 | 11.0 |
| 2018/2019 | 9.5 | 11.5 |
| 2019/2020 | 9.5 | 12.0 |
| 2020/2021 | 9.5 | 12.0 |
| 2021/2022 | 10.0 | 12.0 |
| 2022/2023 | 10.5 | 12.0 |
| 2023/2024 | 11.0 | 12.0 |
| 2024/2025 | 11.5 | 12.0 |
| 2025/2026 | 12.0 | 12.0 |
Until yesterday, compulsory contributions to superannuation were due to increase from July next year; under the new deal, they will remain steady until 2021.
This will improve the budget position over the coming decade, but in future may lead to lower super balances on retirement for individuals, which in turn may put pressure on the public purse to fund aged pensions. Keating calls it "wilful sabotage of the nation's savings" but PM Abbott says the policy change means "keeping more money in workers' pockets".
The Low Income Superannuation Contribution (LISC) will now be retained until 2017.
It is to be hoped that the Murray Financial System Inquiry will recommend ways in which efficiencies can be introduced into the current system (such as lower fees for industry funds) that would mean less of members' funds being eaten up by fees and charges.
There has been no change mooted to date with specific reference to SMSFs but it is possible that tax concessions for higher income earners (who more frequently use SMSFs) may become a target for the government to make budget savings coming into the next election. Discourse on this topic started prior to the last election but was quelled by ALP senior figures such as Bill Kelty see here and Nick Sherry here.
It will be interesting to see the Government's interpretation of its 2013 election promise:
To help Australians have confidence again in superannuation we pledge not to make any unexpected detrimental changes to superannuation.
