A Personal Finance Feature by Peter Murphy, CEO, Christian Super

For most of us, the changes to superannuation recently announced by the government raise a number of questions. The first one is usually, ‘What’s in it for me?’ Christian Super has prepared a summary of the changes and these are below.  Bear in mind that they start in July, 2012 and they need to be passed by the Senate.

Christian Super believes the second question should be, “How will I use my superannuation when I do retire?”

This is something you may not have thought about. Why not take this opportunity to consider the following:

How do you view your retirement? Will it be a time of leisure and pleasure, doing all the things you always wanted to do, or do you see it as an opportunity to continue to serve God, with the greater freedom and extra free-time that retirement brings?

Superannuation that is accumulated prudently has great potential to honour God and enable a fulfilling retirement. If you’d like more information about how you might be able to use your retirement to serve God better, please contact us. We have a range of resources which might be helpful.

What are the key superannuation recommendations?

The main policy initiatives outlined by the Henry Tax Review and supported by the Australian government relating to Superannuation are:

Increase in the Superannuation Guarantee from 9% to 12%

From 1 July 2013 to 1 July 2019 the Government has announced it will increase the Superannuation Guarantee rate from 9 per cent to 12 per cent by small annual increments.

Increase in the Superannuation Guarantee age from 70 to 75

The Government has shown commitment to providing mature workers an extra incentive to remain in the workforce by raising the Superannuation Guarantee age limit from 70 to 75 from 1 July 2013.

Introduction of Government contributions for low income earners

The Government will pay an extra contribution for low-income earners to offset contributions tax on concessional contributions, from 1 July 2012 (although the first contribution from the Government, in relation to the 2012-2013 year, will not be paid until 2013-2014).

Higher Concessional Contributions cap for certain groups

Individuals aged 50 or over with total superannuation balances of less than $500,000 will be eligible for a higher concessional contributions cap of $50,000 (indexed) from 30 June 2012. This extends the current concessional contributions cap of $50,000 (which is not indexed) for those aged 50 or over, which is due to expire on 30 June 2012. The higher cap will allow those with lower superannuation balances to “catch up”, and particularly benefit those who have had periods outside the workforce.

Whilst most changes don’t start until July, 2012 – the potential additional $100,000 in retirement savings that the changes will mean for a person now in their twenties is good news.

For more information, go to: www.taxreview.treasury.gov.au

Christian Super is also able to advise you on the changes. Call us on 1 300 360 907.