Deloitte national superannuation leader Russell Mason said the government’s deferral of the superannuation guarantee by an extra year from 1 July 2021 to 2022 was an “unexpected” change.
“The Coalition government was originally going to pause the superannuation guarantee at 9.25 per cent for two years and then scale it to reach 12 per cent in 2021,” said Mr Mason.
“However, on Tuesday evening the treasurer announced that the super guarantee will not go to 9.5 per cent next year from 1 July 2014 and it will be frozen until 30 June 2018.”
Mr Mason said the guarantee will then increase 0.5 per cent each year until reaching 12 per cent on 1 July 2022.
“Although this does of course mean that it will take longer for people to build up their super – especially when you consider that the previous Labor government had flagged 2019 as the 12 per cent superannuation guarantee date – the long-term impact on superannuation savings individually will be minimal,” he said.
Superannuation partner John Randall regarded the government’s decision to adjust the tax rate payable on excess contributions as a “sensible change”.
“It is currently at 46.5 per cent – now, backdated to 1 July 2013, individuals will have the option to withdraw any excess contributions made from 1 July 2013 together with related earnings, and pay tax at the marginal rate on the earnings,” said Mr Randall.
He said those looking for an increase to the pension payment will be disappointed as “any rise to inflation and the pension means test thresholds will be frozen for three years”.
“In three years’ time, the income and threshold test will change significantly,” said Mr Randall.
“For the purposes of the pension income test, the government will change how it deems the return from a pensioner’s financial assets, from September 2017.”
Mr Mason said he considered the government’s decision to increase the pension age to 70 by 2035 as dangerous because people might “draw down more super than they would have if the pension age stayed at 67, as legislated by the previous Labor government”.
Despite the changes, Mr Mason said Australia will need to do more to address adequacy in retirement, with research from Deloitte showing even in 20 years’ time, 75 per cent of retirees will still receive all or part of the age pension under current eligibility.
