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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
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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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Bill
Bill from QLD commented:

Bill from Qld Where does everyone think the extra money comes from? Yeah just give money to everybody regardless and we will be in a worst position than we are in now. We have to compete with rest of the world and why do you think that Australia is loosing all call centres to the Phillipines and India. Do you complain when you have to talk to someone on the other end of the line that does not understand you. 

Bill
Bill from QLD commented:

Bill from Qld I run a business in Victoria and have six (6) empoyees. 4 from my family including myself I have not been able to afford to pay any super to family members for the last year although I pay the 9.5% regularly to the other two employees. As I am struggling with these and other business fees I am thinking of terminating the 2 employees so that my business can survive. Is it better to have a job and keep the company expenses low as possible. 

Tessa
Tessa from NSW commented:

The Abbott/Hockey show made it almost impossible for a sick person (eg cancer) to access their super to ease their financial stress to allow them to focus on their treatment plan while on unpaid leave or out of work. Apparently has been changed this year. So if your super won't work for you while you're in need and pre-terminal, apparently, you may access if you've defaulted three times on your mortgage and thus you have assessed delight of bad credit if you beat your illness to look forward to! Throw my hands up* if it's good for the flock then I challenge the government and politicians to suck it up and make real sacrifices. Has anyone valued their perks on the cost of maintaining this unjust and unwieldy social system. People talk about handout mentality. You need not look further than the politicians. Where is the value they add to the public purse string?!!! 

Tessa
Tessa from NSW commented:

The cost of doing a deal to hon our an election promise fails the "better off" test as low income earners are yet again disadvantaged. I would like for the politicians to also revoke their perks and see if they will swallow that bitter pill! 

Michael
Michael from NSW commented:

Got to tighten the belt somewhere instead of the eternal Labour style "hand out mentality". Far too many people living off the few of us still working, far too many people weaselling on the disability pension. 

Rhoda
Rhoda from NSW commented:

I think this needs pursuing as the the changes to our super will not affect the politicians. I am fed up with these greedy people and also with this Palmer guy. Who the heck voted this nitwit in. The changes to the average person does not affect politicians and it is time they are held accountable for misuse of taxpayers money. I will not be able to retire comfortable at 67 and hope by then they don't change the age for pension again. I have 12 years to retire with a pension. Who knows I may be dead by then, I am sure politicians may be happy the senior person is knocked off. 

Anthony
Anthony from NSW commented:

Cut the Super . Raise the pension age. A double stab in the back for poor and middle class. Politicions give up nothing.Their wages already on hold. Protecting the big end of town. 

peter
peter from NSW commented:

As usual, it is the sensationalist approach to this issue. When I started my Super Fund my employer was paying a lot less than the current 9.5%. It is the employer that has to pay the increases, nobody else, not the Government of the day or you the beneficiary of the super scheme. I am most thankful for what my employer put into my super in addition to my own salary sacrifice. In addition, I only started paying super when it became compulsory in the 80s as I needed all my wage to bring up 5 kids. So be thankful for what the employer contributes to your super and stop looking for someone else to pay for you future, make it happen yourself. If it has to be then it's up to me. 

David
David from NSW commented:

The total Australian Super requires overhaul . It is not the best in the world by a large measure. All the calculations and models that are offered are assuming the people used as an example remain employed for until their retirement. It also assumes those responsible for the Funds continue to earn on every dollar every year - they don't. There is nothing guaranteed about the Superannuation Schemes except that those working have an automatic deduction from their salary, currently 9.5%. . I would like the model to demonstrate exactly how more money paid in guarantees a biggere return on retirement. 

Ken
Ken from NSW commented:

If you look how jobs are advertised now you will notice the package is quoted "Super included" so it is part of the salary, if you want to boost that you can request salary sacrifice and increase your own super and have the advantages. 

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