The Savvy review of the Henry Review
We’ve been waiting for this. Waiting longer than passengers on a
Sydney train station. Waiting longer than Richmond fans hoping for another Premiership. Waiting longer than patients in Emergency. Now that the Henry review is public, what’s in it for those of us with super?
Here then is a quick guide to the highlights (or lowlights for the pessimists).
Super Guarantee to rise to 12%
This isn’t really news. It’s been on everyone’s wish list for ever. If the Government accedes to this recommendation, there’ll be a gradual increase from 1 July 2013.
2013-14 – 9.25%
2014-15 – 9.5%
2015-16 – 10%
2016-17 – 10.5%
2017-18 – 11%
2018-19 – 11.5%
2019-20 – 12%
Help for low income earners
Starting July 1 2012, the Government will deposit up to $500 a year into the super accounts of everyone with an adjusted taxable income up to $37,000. Basically this is simply refunding the tax payable on super guarantee payments for these people.
Permanent $50,000 p.a. cap for eligible members over 50
This recommendation will basically make permanent the cap that’s been in place for a while now. If you’re over 50 and have less than $500,000 in super, you can add $50,000 of concessional contributions every year. If your super balance is more than $500,000 you’ll be restricted to the lower cap of $25,000.
The Super Guarantee age limit will rise to 75
Given how we’re being encouraged to stay in the workforce longer, it’s only right that we should be entitled to employer contributions to a later age. We just have to wait until July 2013 for the change to come into effect.
8.4 million of us to benefit
The Government expects that 8.4 million of us will have more in our super kitty as a result of these reforms. The recommendations will especially help the 3.5 million Australians on lower incomes who don’t currently receive tax incentives to contribute to their super. The Government reckons that together these 3.5 million will get an extra $830 million to retire on.
An additional $108,000 for a 30 year-old
That’s what the review suggests the average 30 year-old employee will have at retirement.
Other recommendations that might be adopted Abolition of tax on certain super contributions. Halving of tax on super earnings to 7.5%. Removal of restrictions on people 75 + making super contributions.
Government support for development of longevity insurance.
A couple of policies you won’t see
The Government has confirmed it won’t remove the tax-free status of benefits paid to those over 60.
There won’t be a Government annuity product.
The preservation age for super will never be aligned with the pension age.
No real surprises, no major disappointment
Every man and his dog has been calling for a raising of the employer contribution. That’s going to happen - over time. Lower income workers benefit most. That’s about it.
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