Federal Budget 2009
This year's Federal Budget proposed important changes for superannuation and retirement planning, the majority of which are now law.
The most significant changes include:
- Halving the limits for the amount of concessional contributions - which include Superannuation Guarantee and salary sacrifice - that individuals can make to superannuation per annum at the low tax rate of 15%.
- Increasing the eligibility age for the Centrelink Age Pension to 67 years for people born after 1 January 1957.
- Lowering the matching rate and maximum amount of the Government co-contribution initiative until 30 June 2014.
Related to these changes, the Government also changed the income test for the Government co-contribution initiative. For full details of the budget changes, download VicSuper's Federal Budget 2009 information sheet.
For details on other Centrelink changes, refer to My VicSuper Pension.
Superannuation is still a good investment
Due to the regular legislative changes, some members may be less inclined to maximise their final superannuation benefit. It's worth keeping in mind, however, that super still offers a low cost and tax-effective way to build long-term wealth. For instance, consider the advantages which super can offer:
- During working life, super provides compulsory employer savings, significant tax concessions and the advantage of compound interest.
- In the drawdown phase of super, members benefit from tax free investment returns and tax free withdrawals from age 60.
For many people, super is likely to be their largest investment besides their home. The importance you place on it right now will, in all likelihood, depend on where you are in your lifecycle, and time until retirement.
Just remember, wealth is generally created over the long term, and usually via regular savings, limiting cost and an appropriate investment risk and return profile. As a VicSuper member, you can take advantage of all these basic investment principles through your superannuation account.