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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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James
James from QLD commented:

Looks like most of the comments are from ill informed LNP and Clive Palmer followers/supporters! The reason the Labor Party introduced compulsory employer superannuation contributions was so that when the time came for workers to retire in the future they did have to rely on handouts (called pensions) from the government coffers ie your and mine tax contributions and It's called a "Self Funded Pension""..The sooner employers contribute 12% towards superannuation the quicker we will have most/more retirees on a "Self Funded" pension! Simple!! Logical! 

warren
warren from NSW replied to James:

Unfortunately James, you’re the one that’s so poorly informed. SG Superannuation, whilst unique by world standards and a fine ideal in my opinion, it is definitely not the magic potion for a retirement strategy. People need to supplement/contribute (where possible) with at least another 10 – 12% to at least match a living standard they’re use to, and to achieve a reasonable ‘self-funded’ retirement. 

Dianne
Dianne from NSW commented:

The government keeps telling us they can't afford to keep increasing numbers of people on the pension. Therefor, they should be helping people to increase their superannuation so that they don't need a pension. Isn't this just common sense? 

Tom
Tom from NSW commented:

It is businesses or government that pay super. Times are hard for businesses of all sizes & struggling businesses can't employ extra workers or they even go overseas. These extra costs are either passed on or they fail & close. Also consider the extra costs to taxpayers & the economy for public servants super. 

Len
Len from NSW commented:

What else can you expect from liberal governments 

Manfred
Manfred from NSW commented:

The more government regulations including forced superannuation the more we become dependant on a nanny state. We loose more and more a sense of independance, self-reliance and enterpreneurial spirit and become more like zombies like all other bureaucrats and public servants. Fred from NSW 

Stephen
Stephen from NSW commented:

Why does the elected government have to make deals with the half baked PUP? Answer: Because the coalition of labour & greens are anti everything, if they supported what the people voted for then they could make the deals instead of just whining. 

Deborah
Deborah from QLD commented:

Do we need to complain about everything.many people want more abd more.lots of countries dont have pensions or other services ro help old people.we would be a lot happier if we learnt to be thankful for what we do have deb Saunders a pensioner. Alone and disabled. 

warren
warren from NSW commented:

The Commission of Audit suggests “80% of retirees by 2050 – after 60 years of SG superannuation, will still be receiving full or part pension”, as is the situation now. Whilst SG is a reasonable saving mechanism it will not resolve Age Pension and Government cost blowout. Also the Labor/Union/ISA arguments are too simplistic and weak – only the gullible accept their media hype. Those of us who can provide for themselves should do so and in all haste. 

Theo
Theo from NSW commented:

I'm not self employed I work for a company and by no means getting the income I could have for my position but I know my job is secure. No point in asking to double my pay as next year I could be out of a job, that means no income or prospect of getting another at my age. But that's life, make the best out of what you have. 

Stephen
Stephen from QLD commented:

I am not really bothered with the decision to not raise the super from 9.5% to 12%. I think the media hype is outrageous saying it costs us up to $200k. At the end of the day who pays the employer or the employee. Employers are struggling at the moment especially small business. I know because I had to pay super payments and it meant I could only afford to employ 3 employees instead if the preferred 4. The more super an employer pays the less employees they can afford. I suppose it is up to the individual to save and be more responsible. The ironic thing is as a self employed person I have found it hard to contribute to super, simply couldn't afford it. As wages have increased dramatically over the past decade or so, 9.5% has become a fair sum to contribute. I am over the whinging media and the Labor cronies who think money just grows on trees. I am by no means a rich person, however I always remember what my grandfather use to say. "If the rich man is happy the we get to feed off the crumbs from his table!" "If he is not happy, he simply packs his case and leaves the table and we all suffer" Lets hope the abolishment of the mining tax will bring them back now, and get the economy moving and jobs start to flow again. All this will not happen over night but I am sure it will. 

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