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Superannuation Changes - Henry Review/Budget 2010

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Whilst there were many changes in the recent 2010 Federal Budget, today we will be addressing the major superannuation changes.  If you are interested in discussing any of the other changes and how they may advantage wealth creatSGCion, please contact us.   Superannuation Guarantee (SG) - Increasing from 9% to 12 % by 2019/20 

The Government has announced an increase in the SG rate from the current rate of 9% to 12% by 2019/20.  The SG rate will begin to increase from 2013/14 as follows:

Year

SG Rate

Increase

2010/11

9%

0%

2011/12

9%

0%

2012/13

9%

0%

2013/14

9.25%

0.25%

2014/15

9.5%

0.25%

2015/16

10.00%

0.50%

2016/17

10.50%

0.50%

2017/18

11.00%

0.50%

2018/19

11.50%

0.50%

2019/20

12.00%

0.50%
Case Study – Impact of Super Guarantee Increase:

 

Dan

Fiona

Age

30

30

Salary

$60,000 p.a.

$60,000 p.a.

Compulsory Contribution level

Remained at current 9% SG

Increase in line with Governments plans

Funds in retirement at age 65

$1,877,987

$2,152,791

Capital draw downs in Retirement

(to age 95)

$124,752 p.a.

$144,143 p.a.

 

  • Fiona will have accumulated $274,804 more at retirement at age 65 with the Governments new plan.
  • Retirement Income levels:
  • Assuming capital draw downs until age 95, Fiona will be able to draw nearly $20,000 more annually over 30 years.

Assumptions: Return in super of 8% net of fees but before tax commencing 1 July 2010.

Increasing age at which SG applies from 70 to 75

From 1 July 2013 the age limit to which the compulsory SG will apply will be increased from age 70 to 75.  This means workers aged 70 to 74 will be eligible to have SG contributions made on their behalf for the first time.

Concessional contribution caps- back to $50,000 for those 50 & over

From 1 July 2010, the concessional contribution cap will be maintained at $50,000 (indexed by AWOTE) and will not be reverted back to the universal cap of $25,000 for those aged 50 and above.  This will only apply to those ages 50 or over who have total super balances of less than $500,000.

Low Income Earners $500 Government Contribution

As of 1 July 2012, to Government have announced that will contribute an annual contribution of up to $500 directly into superannuation for those workers earning taxable incomes of less than $37,000.  They have confirmed that no contributions tax is paid on SG contribution for low income earners in this bracket.  The Government will also be maintaining the Co-Contribution Scheme.

By: May 28, 2010 Budget Tags: , ;