What do the Budget changes mean for my super?

The Rudd Government’s second Federal Budget, introduced in a climate of continuing economic downturn and reducing revenue, includes changes to the superannuation system which may affect Cbus members.

The announcement of substantial investment in Australian infrastructure over the next few years, however, is positive news for workers in the building and construction industry.

The following summary is provided to help you understand what these changes mean and how they will affect your retirement savings. It’s important to note that these changes are proposals only and will need to be passed by the Parliament before they become law. 

You can also download a fact sheet to find out more about how the Federal Budget changes affect your superannuation, taxation, pensions, and Centrelink benefits.

Click here to download the Cbus Federal Budget Update May 2009

1) Government Co-contribution scaled back

From 1 July 2009, the Government will reduce its co-contribution from $1.50 to $1.00 for every $1.00 contributed by eligible members.  This will be a temporary cut only, with the co-contribution gradually increasing to $1.50 in the 2014/15 financial year. 

SUPER TIP: ACT NOW BEFORE THE RULES CHANGE

If you meet the eligibility requirements and can make a personal (after tax) contribution to your Cbus account before 30 June 2009, you will still get a co-contribution of upto $1500. You can calculate how much co-contribution you are eligible for by using the co-contribution calculator

2) Contribution limits reduced

From 1 July 2009, the Government will further limit the amount you can contribute to your super account each year. The new limits are as follows:

• Concessional contributions
  The concessional contribution limit will reduce from $50,000 to $25,000 per year.  For members over 50 years of age, the transitional limit (which applies until 30 June 2012) will reduce from $100,000 to $50,000 per year.
  
  The maximum that can be contributed to superannuation for an individual (as both employer and salary sacrifice contributions) and receive concessional tax treatment at 15% for 2009/10 is as follows:
  
  Under 50 years of age:     $25,000 - tax on excess @ 46.5%
  Over 50 years of age:       $50,000 - tax on excess @ 46.5%
  
  
• After tax contributions (i.e. voluntary or personal contributions)
  The contribution limit will remain at $150,000 (or $450,000 over three years) for the 2009/10 financial year.

SUPER TIP: CHECK HOW MUCH YOU’RE CONTRIBUTING

If you are currently sacrificing large amounts of your salary into super(that is making contributions to super out of your 'before tax' salary or wages), you will need to ensure that you don’t exceed the new contribution limits (which are due to commence on 1 July 2009). You may also like to speak to a Cbus Adviser  to ensure this is still the right strategy for you.

3) 50% reduction in minimum pension payments extended

Recognising the effect of the economic downturn on income stream earnings, the Government reduced the minimum income stream payment amount by 50% in the 2008/2009 financial year. This reduced minimum will be further extended until 30 June 2010.

SUPER TIP: REDUCE YOUR PENSION PAYMENTS

If you’re worried about your income stream savings running out, you may like to consider reducing your current payment amount. Call us on 1300 368 212 for assistance.

4) Age Pension age and amount to increase

The base rate of the Age Pension will increase by:

• $32.49 per week for singles, and
• $10.14 per week (combined) for couples.

The age at which people can access the Age Pension will also increase from 65 to 67 years. This will happen over 7 years from 2017. See the table below for details:

SUPER TIP: SPEAK TO A PROFESSIONAL

Further information about the benefits provided by Centrelink can be found at www.centrelink.gov.au. You may also like to speak to a Cbus Adviser to ensure you are receiving your full benefit entitlements.