Big changes to superannuation have been announced in this year’s Federal Budget with Treasurer Josh Frydenberg giving pensioners more flexibility with their retirement savings and allowing first home buyers more access under the Super Savers Scheme.
More from Federal Budget 2021:
What it means for those approaching retirement
Treasurer Josh Frydenberg acknowledged that on average, women retire with less savings than men and this is partly due to women being more likely to work part time while they raise children.
Women make up 68 per cent of all part-time workers in Australia.
“We want all Australians to get the most out of the superannuation system,” Frydenberg said.
“So tonight, the Government will remove the current $450 per month minimum income threshold for the superannuation guarantee.”
This means that those earning less than $450 a month will now qualify for the superannuation guarantee so they will have 9.5 per cent of their wages put aside for retirement.
“This will improve economic security in retirement for around 200,000 women,” Frydenberg said.
“Our plan will also make it easier for Australians to prepare for retirement and to be more secure once in retirement.”
Additionally, this Budget has repealed the work test for retirees in a bid to help those who were part of the workforce before compulsory super to boost their retirement savings.
Those aged 67 to 70 will no longer be required to meet the work test when making, or receiving, non-concessional super contributions or salary sacrificed contributions.
“We will improve flexibility by no longer requiring older Australians to meet a work test before they can make voluntary contributions to superannuation,” Frydenberg said.
Additionally, the Government said those in the 67 to 70 age brackets will be able to access the non-concessional bring forward arrangement.
The cap on lifetime super contributions will increase from $1.6 million to $1.7 million allowing retirees to put more money aside pre-retirement.
In another move, Aussies over the age of 60 will be allowed to make a bulk contribution of $300,000 into their super if they downsize their home.
Previously, Australians needed to be at least 65 years old to make the contribution.
The Government said this move is designed not only to help older Australians save for retirement but also give younger families more access to the housing market by freeing up some supply.
What it means for first home buyers
Aussies looking to enter the housing market can now take more money out of their super to go towards a home deposit than ever before.
Under the changes, the amount that can be released under the First Home Super Saver Scheme has been increased from $30,000 to $50,000.
“Under the Coalition, home ownership will always be supported,” Frydenberg said.