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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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Cuts to Super: what they could mean for you

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Theo
Theo from NSW commented:

Also just to ad I don't put my money into super as I look after it myself. I do have enough to retire on but I'm not letting any Government tell me what to do with my money that I worked for. I put my money aside for my own retirement and I won't be a drain on the system for my pension. If the Governments didn't keep changing the goal posts yes I would put my personal money into super I could control it without Government interference of what I can have and when I can have it, it's my money not theirs. 

alba
alba from NSW commented:

OH WELL WHAT CAN YOU DO , NOW IS LIKE THIS 

Theo
Theo from NSW commented:

Well Clive Palmer would wouldn't he, all the changes made and negotiated by Clive Palmer benefits Clive Palmer. He now doesn't have to pay the increase to his employees, the abolition of the mining tax supported by Clive benefits Clive's mining interests, as does the abolition of the carbon tax. It is good that both the mining taxes and carbon taxes are gone but don't kid yourselves that Clive does what benefits him and if it doesn't he'll will put up hurtles where ever he can for the Government. The Palmer United Party is funded and run by Clive Palmer by his family for his family. It is the only political party run by a single person's own business interests. He is dangerous and can do a lot of damage to our country's future, if we give people like Clive more power we could very well have a large business running our country to benefit themselves. 

Roslyn
Roslyn from QLD commented:

I thinkits tragic the way your organisation mislead people. The super has not been cut. The planned increase has been postponed. Your members can put extra money in if they want. Are you in cahoots with the labour party or just the unions? 

Joyce
Joyce from NSW replied to Roslyn:

This organization does not mislead anybody. Realistically the super HAS been cut by the very fact that contributions will not rise until 2021. Do the math and see how many people will be thousands and thousands of dollars worse off when they retire. You believe that is fair? 

Adrian
Adrian from NSW commented:

So what are you going to do to help ?? Or are we alone again when issues like this happen. Every week some how we are being screwed by some one in government I have been work since i was 14yrs & i am now 57yrs & i am told to work for another 10yrs . I have always paid tax & paid for my family .. So now i need to work longer for less, i put money in the bank & get taxed I take money out of my bank & i have to pay Where is going to end. 

Someone
Someone from NSW commented:

I don't know where you think the extra super is coming from. Employers who have to pay the extra super only adjust your take home pay offer to allow for the extra super. If you want extra super you can salary sacrifice. If you think it comes out of thin air you are wrong, an employer can only charge a certain amount for your labour, if this charge out rate is too high he will not get sales then you don't have a job. If your over 50 putting up the super contribution from 9% to 12% is peanuts, if you are over 50 you should be sacrificing a minimum 20% of your wages to be ready for retirement. Next thing people will want the government to be responsible for every decision everyone makes in their lifetime. The previous government emptied the bikkie tin, big time! R Jones 

Terry
Terry from NSW commented:

As I understand it the superannuation increase was to be paid by the employer in lieu of pay rises. If the employee wants to pay more superannuation they could pay the pay rise into their superannuation fund and thereby not be disadvantaged. Some persons may think it advantageous to have extra money now .. Superannuation has not been a great success as few superannuates have sufficient fund to be self funded and most still require pert pension to live a reasonable lifestyle in retirement. Government rules as to where you can invest your money to obtain the tax benefit resulted in a lot of retirees being adversely affected by the GFC 

Sandra
Sandra from NSW commented:

Surely Tony Abbott can't be so arrogant as to assume that Employers will now automatically give their employees an additional 3% pay rise to cover the "lost" superannuation increase in order to have" extra money in their pockets now rather than squirreled away in their super funds"? So many individuals seem to think Super contributions come from the Government and not directly from your agreed "Package". I salary sacrificed for many years only to lose most of it in two recessions so now I am working part time at the age of 71 and on the Aged Pension in order to survive. 

Arthur
Arthur from QLD commented:

Don't be hoodwinked by The Labor and Super funds - this is a good thing. You can now make your own choice with what you want to do. Put money into super or use the money for something else After all it is YOUR money. Arthur. 

Merve
Merve from NSW commented:

If someone on $100000 a year can't save $20000 in 17 years with the money they will not have to pay into Compulsory Super they should give the game away. Merve NSW. 

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