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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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Cuts to Super: what they could mean for you

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Kenneth
Kenneth from NSW commented:

Some of you people have got to wake up to yourselves, nothing is for free, we are lucky to have 9.5% super at the moment, we cannot afford an increase to 12%, small businesses will fold. If you want your super to increase pay the thing yourself, dont wait for Labor Government handouts (when and if they get back in) Look at yourselves always wanting a free ride, leave the super as is and get on with your life 

Someone
Someone from NSW commented:

I have children and there husbands who will be affected by this it means they will struggle to maintain a decent standard of living. 

Graeme
Graeme from NSW commented:

Older workers will undoubtedly 'miss out' on that extra compulsory percentage. I know this is not a 'one-size-fits-all' initiative but in my case (and that of my wife), in the last 10 years of employment to age 65 we had less outgoings (mortgage paid off, kids grown up & working) so we stashed away extra $$$$ of our own contributions. OK, it meant careful planning but now at 72, it has made all the fifference to our life-style. No, we weren't high paid big shots, just welfare workers but the effort was well worth it. Consider. 

Someone
Someone from NSW commented:

Yes, more retirees will have less to retire on. The same as the low income retirees will have less. The govt will have less money to pay out on the more greatly needed pensions 

Tony
Tony from NSW commented:

Jess Lindell's comment ... "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." is a total misrepresentation. The increase in contribution levels was to be a FORCED saving into a super scheme and administered by the employer. I would rather control my contributions and choose where I save my money, which may not be into a super scheme. It may be a morgage or some other investment. I want the right to decide for myself what I do with MY money. I am still able to contribute the "...almost $20,000" if I so desire, so it has not been taken away. Tony from NSW 

Stephen
Stephen from NSW commented:

Everyone needs to take ownership of their own superannuation and retirement. People can contribute out of their own money at the moment $25,000 a year. 

Charlie
Charlie from QLD commented:

It's not so much about the money. It's the fact that they lied and did a deal as did Gillard with the Carbon price and she got crucified for it, as should Abbott.Wake up Australia, this Government is bad news. 

Tony
Tony from NSW replied to Charlie:

Grow up Charlie. Julia Gillard and also K Rudd put this country on a welfare and spend diet with no one prepared to take responsibility for themselves. The country owes us nothing. We owe it, and the sooner you realise it the better for the whole country. 

Bruce
Bruce from QLD commented:

Abbot is deceitful! How can the government attack those who have paid tax all their lives? Why is it that Abbot believes that the minerals of this country belong to his mining magnate mates and can't possibly be taxed? Because he's a deceitful weakling who lives on his knees! 

Bill
Bill from QLD commented:

All these people complaining about super are receivers of super 9.5% going to 12% they should try to be the payers of super. 

Bill
Bill from QLD commented:

Bill from Qld Wan"t wan"t wan"t everybody wants more. Soon most people will want more from their doll payments unless we slow down expenses to business. 

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