It’s Budget time, friends and all of Australia has been quick to report who the big winners and losers of the 2021 Federal Budget are.
One of the key areas of interest for Aussies is superannuation, and the changes the Budget will bring to that area of financial security.
As news.com.au reported yesterday, Treasurer Josh Frydenberg has canned the $450 monthly threshold for super contributions in the 2021 Budget, meaning that folks who earn less than $450 per month from an employer are set to begin receiving superannuation contributions.
Who will benefit from the Budget’s changes to superannuation?
The decision allows part-time workers, and others in lower-earning roles (overwhelmingly, mothers) to see some funds committed to their superannuation funds.
A shift towards a more inclusive approach to superannuation contributions is one step towards closing the retirement income gap we currently see between men and women. According to a recent piece from the Sydney Morning Herald, there are some Australian electorates where the superannuation balance of men is almost double that of women. A major factor here is reduced work hours and time spent out of the workforce, as women are often the primary caregivers for children.
Ditching the earning threshold for super contributions would work to better support women’s economic security going forward. Introducing compulsory superannuation payments for paid parental leave would be another promising step.
Xavier O’Halloran from Super Consumers Australia spoke to the ABC about the decision, stating that:
“The $450-a-month threshold was an archaic rule from a paper-based era that left some people not receiving any super for the hours they worked every week.
“Scrapping this rule will see about 200,000 women and 100,000 men on low incomes earn a combined $90 million in extra super a year.”
This update comes along with other women-focused deliveries in the 2021 Budget, including efforts to better assess superannuation balances in divorce settlements; a billion dollars dedicated to women safety (split across domestic and sexual violence prevention programs, grants for women escaping domestic violence, and women’s legal services), and funding for a survey of First Nations women.
What other changes are coming to super?
The First Home Super Saver Scheme was updated to allow for access to up to $50,000 of voluntary concessional and non-concessional super contributions. The previous cap was $30,000.
From 1 July 2017, first home buyers were given the option to make voluntary contributions to their super funds in order to better save for a property. Those who take part in the scheme are eligible to have up to $15,000 per financial year released, and $50,000 in total. The Guardian reports that the government intends to enact legislation by 1 July 2022 with changes taking place from the following financial year.
Changes to the ‘work test’ have also been announced. Currently, older Australians (aged 67 – 74) must prove they are employed to work for 40 hours or more in any 30-day period in a financial year in order to be eligible to contribute to their super funds. This work test will be repealed as of July 1st.
“The government will amend the work test rules to allow retirees who have not had the benefits of compulsory superannuation throughout their working lives to get more out of the superannuation system,” the budget papers said.
Treasurer Josh Frydenberg handed down the 2021-22 Federal Budget on the evening of May 11, 2021.
This article has been updated since its original publish date.