Changes to super

From 1 July 2023 individuals receiving Superannuation Guarantee (SG) contributions from their employer, will see an increase from 10.5% to 11% – helping to further boost their retirement savings and secure their financial future. 

It’s currently expected that the SG rate will continue to rise; first to 11.5% on 1 July 2024 and then 12% on 1 July 2025 – meaning even more savings helping to boost the super balances of working Australians.

A little can go a long way

Although an increase of 0.5% to the SG rate may sound small, over the long term, even a small amount can have a significant impact on your balance. 

The Mercer Retirement Income Simulator, can help you visualise what your retirement income could look like, how long it might last and the difference adding a little extra can make.

In March 2020, the Federal Government halved the pension minimum drawdown rate for account-based pensions, transition to retirement pensions and similar products. This was a temporary response to COVID-19, to help provide Australians with more flexibility in how they managed their superannuation assets during uncertain times.

These temporary drawdown rates were in effect for the 2019/20 to 2022/23 financial years and ended on 1 July 2023.

For members who were previously receiving a pension payment amount below the standard drawdown rate, it’s likely they’ll see an increase in their pension payments now that the rates have returned to normal.

The government co-contribution aims to help low and middle-income earners add to their retirement savings by co-contributing up to $500 to their super if after-tax contributions are made. The exact amount that the Government contributes will depend on both your income and how much you contribute in after-tax contributions.

From 1 July 2023, the Government has increased the lower threshold for low and middle-income earners from $42,016 to $43,445 – providing more Australians with the opportunity to take full advantage of this scheme.

The general transfer balance cap, which provides a cap on how much money an individual can hold in retirement phase increased to $1.9 million on 1 July 2023.  Previously there was a cap of $1.7 million, and any amounts over this needed to be withdrawn.

This increase to $1.9 million provides individuals with an additional $200,000 that they can keep in a retirement phase product such as an allocated pension – an environment where those funds can generate tax-free investment returns, further helping to fund their retirement.

For more information on the transfer balance cap, please see the ATO’s website.

The bring-forward rule, which allows for eligible individuals to ‘bring-forward’ contributions from future financial years, potentially up to $330,000 within a single financial year has been expanded to align with the $1.9 million general transfer balance cap.

Previously individuals who had $1.59 million or more in superannuation were not eligible to use the bring forward rule. From 1 July 2023 however, the thresholds have increased to the below:

By expanding these thresholds, the Government has provided individuals with more flexibility around when and how much they contribute to their super.