Just eight months on from its first ‘pandemic Budget’, the Federal Government has delivered its 2021 edition.

With a raft of significant measures around superannuation already announced last October, this year’s Budget wasn’t quite as packed with big changes, but there are still a couple of important things to be aware of.

We’ve highlighted the proposed changes we think are most relevant to our members, and explained what they might mean for you.

Removing the $450 contribution threshold

The proposed measure:

Currently, an employer must make Superannuation Guarantee contributions to your super if you are over 18 and earn more than $450 before tax in a calendar month. The Government has proposed removing this $450 threshold.

Proposed effective date:

1 July 2022

What it means:

This measure is aimed at bridging the super balance gap for people in part-time employment and those with lower incomes. In particular, the Government believes that removing the minimum threshold will improve retirement outcomes for women.

The measure follows the release of the Retirement Income Review earlier this year, which found that, due to structural factors such as the gender pay gap and breaks in full-time employment, 63 percent of Australians affected by the threshold are women.

Increasing the First Home Super Saver Scheme

The proposed measure:

Increasing the amount individuals can withdraw via the First Home Super Saver Scheme (FHSS) from $30,000 to $50,000.

Proposed effective date:

1 July 2022

What it means:

The Government introduced the First Home Super Saver Scheme (FHSS) in 2017 to help more Australians save for a deposit. Individuals are currently able to withdraw $15,000 worth of voluntary contributions they’ve made to their super in a financial year, up to a total of $30,000 in contributions (and related earnings) across all years, to buy their first home.

Under the new Budget proposal, the maximum amount of voluntary contributions that can be released under the Scheme will be increased from $30,000 to $50,000. It’s important to note that there is a range of eligibility criteria you must fulfil in order to use the FHSS.

Expanding eligibility for downsizer contributions

The proposed measure:

Reducing the eligibility age for downsizer contributions from 65 to 60.

Proposed effective date:

1 July 2022

What it means:

Downsizer contributions allow eligible individuals to make a one-off, post-tax contribution to their super of up to $300,000 from the sale of their home; in a couple, this means each person could contribute up to $300,000. These contributions do not count towards non-concessional contribution caps.

Currently, you must be aged 65 or above in order to make a downsizer contribution. The Government has proposed reducing this age limit to 60 to allow more people to save for their retirement.

Partial repeal of the work test

The proposed measure:

Allowing individuals aged 67 to 74 to make certain types of contributions to their super without needing to meet the work test.

Proposed effective date:

1 July 2022

What it means:

At the moment, an individual aged 67 to 74 can only make voluntary contributions into their super, or receive contributions to their super from their spouse, if they meet the ‘work test’, which asks that they work at least 40 hours over a 30 day period in the relevant financial year.

Under the proposed measure, individuals aged 67 to 74 will be able to make or receive salary sacrifice contributions and non-concessional contributions – that is, contributions made from their after-tax salary, such as those made via BPAY – without meeting the work test.

The usual contribution caps will still apply, and individuals will still have to meet the work test to make personal deductible contributions.

Beyond the Budget

While it wasn’t mentioned in Treasurer Josh Frydenberg’s Budget speech, the Government has confirmed that the Superannuation Guarantee (SG) will start to increase as planned on 1 July 2021.

The SG, or the money that your employer must contribute to your super on your behalf, will rise from 9.5 to 10 percent of an employee’s ordinary time earnings this year. It will then increase by 0.5 percent each 1 July until it reaches 12 percent on 1 July 2025.

The increase is designed to ensure that our super balances keep up with the cost of living by the time current employees reach retirement, so they can enjoy a comfortable retirement.

The confirmation that the increase will kick off this 1 July follows several years of debate in the media about its necessity and, over the last year, its timing in the wake of the COVID-19 pandemic.

Originally legislated by the Gillard Government, the gradual increase was first scheduled to begin in 2015, but was put off until 2021 by the Abbott Government in 2014.

Keep your information secure

​With super in the news, cyber criminals are carrying out phishing attacks and scams using a variety of different channels, such as email, phone or in person.

The government has put together a guide to help you spot a scam:

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