As Australians gear up for the upcoming Federal Election – remember, it’s that thing that happens between leadership spills – the major parties have been busy announcing policies and debating issues in a bid to secure votes. 

With the Budget only a few weeks old, the economy is playing a key role in the campaign – and superannuation in particular has become a major battleground for both the Labor and Liberal parties. 

We know it can be hard to keep track of all the back and forth during an election, so we’ve cut through the spin to highlight the key measures being proposed around super and what it all means: 

Australian Labor Party (ALP)

The ALP is taking a raft of super-focused policies to the election, many of which it announced back in 2016. Key to its pitch is its promise to increase the Superannuation Guarantee rate from 9.5%, where it currently sits, to 12% “as soon as practicable” if elected.

  • Increasing the Superannuation Guarantee rate

    Under the previous Labor Government, the Superannuation Guarantee rate – the percentage of your salary your employer must contribute to your super – was scheduled to increase to 12% by 2019/20.  

    However, the Coalition Government in 2014 temporarily froze the rate at 9.5% until 2021, at which point it will start to increase by increments of 0.5% each year to reach 12% in 2025. 

    The ALP has stated it will, if elected, increase the Superannuation Guarantee to 12% “as soon as practicable”. It will then “set out the pathway” to reach its “original objective” of 15%. 

  • Lowering contribution caps

    The ALP will lower the annual non-concessional (after-tax) contributions cap from $100,000 to $75,000.  

    It will also lower the High Income Superannuation Contribution threshold from $250,000 to $200,000.  

    Currently, those whose combined income and super contributions exceed $250,000 pay what’s known as ‘Division 293’ tax. This is an additional 15% tax on the lesser of their concessional (before-tax) contributions or the amount in excess of the Division 293 income threshold.  

    The ALP will also remove catch-up concessional contributions. This measure, which came into effect 1 July 2018, allows someone who a) has a total super balance of less than $500,000 as of the previous 30 June; and b) makes or receives concessional contributions less than the annual cap of $25,000 to accrue, or carry forward, the unused amounts up to the cap for up to five subsequent financial years.   

  • Eliminating tax deductions for personal super contributions

    If elected, the ALP will also remove the ability for people to claim a tax deduction for personal super contributions made from their after-tax income.  

    This was previously a measure afforded only to the self-employed, unemployed, retirees, or those who earned less than 10% of their income as an employeehowever was extended by the Coalition in recent years to include more Australians. 

  • Bridging the gap for Aboriginal and Torres Strait Islander peoples

    According to the Australian Institute of Health and Welfare (AIHW), for the Aboriginal and Torres Strait Islander population born in 2010–2012, life expectancy was estimated to be 10.6 years lower than that of the non-Indigenous population for males and 9.5 years for females. 

    In recognition of this gap, the ALP stated that it supports “exploring” the introduction of early access to preserved super accounts, retirement, and aged pensions for Aboriginal and Torres Strait Islander peoples. 

  • Bridging the super gap for women

    According to recent analysis of four million super account balances by actuaries Rice Warner, men aged between 30 and 60 have super balances worth 42 percent more than those of women of the same age. The gap is at its largest for women aged in their late 30s to mid-40s. 

    The ALP stated it will “implement policies that work towards closing the significant gender gap in superannuation savings”. Among these policies is phasing out the minimum income threshold at which employers must begin paying compulsory contributions; the threshold is currently $450 a month.  

    It will also legislate to provide super contributions on the Federal Government’s paid parental leave scheme.

  • “Fee relief” for workers on unpaid carer's leave

    The ALP has stated it will work with the super industry to deliver “fee relief” for workers on unpaid carer’s leave, to ensure that super products aren’t negatively impacting workers with caring responsibilities. 

The Liberal Party

The Liberal Party has proposed a few changes to superannuation, which were announced in its April Budget. These include: 

  • Changes to super for those aged 65 and above

    Treasurer Josh Frydenberg announced that, if elected, the government will exempt Australians aged 65 and 66 from the contributions ‘work test’. Currently, a person over the age of 65 can only make ‘voluntary’ contributions (including personal contributions and non-mandated employer contributions) if they work a minimum of 40 hours over a 30-day period.  

    The government will also allow Australians aged 65 and 66 to access the ‘bring forward’ rules for non-concessional contributions. At the moment, the bring forward rule allows only those under the age of 65 to make up to three years’ worth of non-concessional contributions (which are otherwise capped at $100,000 a year) in one year. 

    The government also announced it will increase the age eligibility limit for spouse contributions to 74 years. Currently, Australians aged 70 years and over can’t receive contributions made by another person on their behalf.  The Government has announced it is increasing the age limit to 74 years. However, they will still need to meet the work test if aged over 66. 

  • Greater advocacy for consumers

    With both the Productivity Commission and the Royal Commission into Misconduct in the Banking, Superannuation, and Financial Services Industry finding a range of issues in the super sector, the Budget included more than $600 million in funding over 5 years for measures to address the key issues. 

    While most measures are aimed at industry, the government also proposed a measure to help consumers directly: a Superannuation Consumer Advocate. 

    The government announced in the Budget that it will provide funding to undertake an expression of interest process to identify different options to support the establishment of a Superannuation Consumer Advocate.  

    The Advocate would provide input on behalf of consumers in policy discussions, and provide information to educate and assist consumers to navigate the superannuation system. 

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