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NewsCuts to Super: what they could mean for you
Cuts to Super: what they could mean for you

Cuts to Super: what they could mean for you

Tags: Cost of Living Superannuation
Last updated by Jess Lindell on

100271122-broken-nest-egg-gettyp.600x400Some Australian workers aged over 50 will be $20,000 or more worse off after an unexpected deal between the Government, the Palmer United Party and crossbench Senators.

The last-minute deal on Tuesday night means the planned increases to compulsory superannuation contributions from 9 to 12 per cent have been delayed by 6 years.

If you’re still working, your Super contributions now won’t rise again until 2021.

3.6 million low-income workers, including over 2 million women, will be further hit, as they will also lose $500 per year when the Low Income Superannuation Contribution is abolished in 2017.

So what’s changed?

The amount of money employers are required to contribute to Superannuation has slowly been increasing from 9 to 12%.

Since July 1 this year, employers have been required to pay a minimum of 9.5% of earnings into superannuation. The minimum amount of superannuation contributions your employer had to pay would’ve increased to 12 per cent by 2019.

The Government’s deal with the Palmer United Party means the increases will be delayed and won’t reach 12 per cent until 2025.

According to research by Industry Super Australia (ISA), for a 50-year-old on $100,000 a year, it will mean almost $20,000 less in contributions by the retirement age of 67.

What about the Low Income Superannuation Contribution?

Australian workers who earn up to $37,000 get a tax rebate known as the Low Income Superannuation Contribution (LISC).

This means the Government pays up to $500 each year into the superannuation accounts of low-income earners to help them save for their retirement.

Under the new deal this contribution will be abolished.

The abolition of the LISC is particular unfair to women, as they make up two-thirds of the 3.6 million lowest paid workers.

The deal was struck so that the Government could abolish the mining tax, and the crossbench Senators such as Clive Palmer could save the Schoolkids Bonus, as this story explains.

The Government argues we will have more money in our pockets in the short-term even if we have less to retire on. What do you think?

Originally posted on .

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JOHN
JOHN from NSW commented:

WOULD BE GOOD IF AVERAGE / LOW INCOME EARNERS - COULD CONTRIBUTE TO THEIR SUPER BUT MOST CAN'T - SO MUCH FOR GOVERMENT POLICY 

victor
victor from QLD commented:

I believe that charity begins at home.The politicians should legislate to make cuts to their super before they make any changes to ours .I am not aware if every person in this country knows that our politicians have the very best super deal that one could have. 

Tony
Tony from QLD commented:

Oh I forgot to point out that the use of the word "Cuts" is not correct. No government has ever made a retrospective negative change to super (that's why we have all those "grandfathering provisions" that make super expensive to manage). The change was to defer the increase in the mandatory employer contribution. 

Tony
Tony from QLD commented:

John and Janice have got it right. People have to save for their 25 (on average) retirement years. Compulsory super started at 3% in 1992 and got to 9% in 2002. Over your total working life you need 15% every year to fund those 25 years. The Australian super system will not mature for another 25- 30 years so the age pension is just a safety net NOT an entitlement. The government needs to support the savers not the spenders. 

Dianne
Dianne from NSW commented:

I don't understand why the goverment puts these stipulations on any super as the more we have in super the less the goverment has to give us in pension no brainer Dianne Goulburn 

John
John from QLD commented:

There is nothing to stop people topping up their own Super. Maybe now the opposition parties will use their heads and back the government on certain reforms which will cut out the need to do deals with idiots like Palmer. 

Janice
Janice from NSW commented:

as a small business owner, people should start saving themselves for their retirement not leaving it to employers to do that form them. the labor government introduced Fairwork and and the wages went up and with super as well, no wonder there are so many small business going broke, no wonder there is high unemployment, we cant afford to pay for people in full time employment 

Paul
Paul from NSW commented:

If you get more money in your pocket as Tony Abbott suggests you will then why don't you add it to your Super Fund. There are tax advantages for doing this. On the other hand I have made a choice to earn more as well as invest in other areas. If you don't know how to make more money then you're not trying. I have seen people from their late teens into their 80's make a substantial increase to their income and improve their lifestyle while having fun. Not really sure if there is another reason I would do it. We can all use a little more fun and I don't care what age you are. If you want to know my secret just contact me. 

Someone
Someone from NSW commented:

AUSSIES SHOULD BE RUNNING THE COUNTRY NOT YANKS AND POMMIES AND ALL THE OTHER IMIGRANTS THAT ARE RUNNING THE COUNTRY AT THE MOMMENT SHAME ON YOU ALL FOR PUTTING FORENNERS INCHARGE I HOPE YOU ARE PROWD OF YOUR ACCIONS BECAUSE I THINK YOU ARE ALL SCABS 

Someone
Someone from NSW commented:

YOU VOTED ABBOTT IN NOW SUFFER FOR YOUR ACTIONS ABBOTT WORKCHOICES IS BACK BUT HE IS BRINGING IT IN THE SLIMMY WAY A POMMIE BASTED DOES SUFFER FOOLS YOU PUT IT THERE 

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