29 March 2022

Federal Budget 2022-23 Highlights

This year’s budget has a focus on easing the cost-of-living pressures for Australians, with limited proposed changes to existing superannuation arrangements. This isn’t a great surprise given the significant changes to the industry in the past two years.

The main item that specifically relates to superannuation is the extension of the pension drawdown reduction as detailed here.

Extension of pension drawdown reduction

The Government has announced it would extend the 50% reduction of the superannuation minimum drawdown requirements for account-based pensions and similar products for a further year to 30 June 2023.

The minimum drawdown requirements determine the minimum amount of a pension that a retiree must draw from their superannuation to qualify for tax concessions.

Given ongoing volatility, this change will allow retirees to avoid selling assets to satisfy the minimum drawdown requirements.

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The Superannuation Guarantee will increase to 10.5% from 1 July 2022

The Superannuation Guarantee (SG) rate is currently 10% of your ordinary time earnings. However, from 1 July 2022, the SG rate will increase to 10.5% as planned and will continue to rise by 0.5 percentage points each year until it reaches 12% by July 2025.

In recent times, there has been debate about whether the Government should postpone or cancel the SG rate increase. Rest is pleased that the Government has decided to leave the increase in place as it will significantly benefit our members’ balances upon retirement – particularly for women, and workers in part-time and casual jobs with lower incomes. 

The Superannuation Guarantee not extended to Paid Parental Leave

Rest had hoped to see the Government announce that the Superannuation Guarantee would be extended to be payable on the Paid Parental Leave Scheme, but unfortunately this was not included. Rest will continue to advocate for this measure, as it is significant in improving the super balances of women and addressing the super gender gap.

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