Boosting Australians' Superannuation Savings - Superannuation Guarantee (Administration) Amendment Bill 2011

It is increasingly apparent that many Australians do not have enough money in their superannuation to fund their retirement. This is particularly so for women, many of who have a break in their working life to have children. To address this, the Government has introduced a bill to increase the superannuation guarantee charge percentage and to remove the age limit on superannuation guarantee contributions. The Bill, the Superannuation Guarantee (Administration) Amendment Bill 2011 (Bill), was introduced into the House of Representatives on 2 November 2011.

 

What are the key reforms in the Bill?

This Bill proposes:

  • to amend the Superannuation Guarantee (Administration) Act 1992 to remove the 70 year age limit until which the superannuation guarantee must be paid for an employee; and
  • to gradually increase the superannuation guarantee charge from 9% of the employee's salary to 12%. The full increase will be complete in the 2019-2020 income year.

At what rate will the Superannuation Guarantee charge percentage increase?

The Superannuation Guarantee charge percentage will be increased gradually through:

  • initial increases of 0.25 percentage points on 1 July 2013 and 1 July 2014.
  • ongoing increases of 0.5 percentage points each year until 2019-20, when the SG rate will be set at 12 per cent.

The transition details are in the table below:

Year 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 onwards

SG rate (%)

9.25

9.5

10

10.5

11

11.5

12

When will the age limit on superannuation guarantee contributions be removed?

Originally it was proposed that the Bill would lift the superannuation guarantee age from 70 to 75. The House of Representatives however amended the Bill to remove the age limit altogether. This change would enable workers over the age of 70 to receive superannuation contributions into their funds.

What is the commencement date?

The amendments set out in the Bill are proposed to commence on 1 July 2013. However, that is subject to the passing of the four Bills that relate to the Minerals Resource Rent Tax (MRRT) package coming into effect before 1 July 2013[1]. The Government intends to cover the costs of the Bill with the revenue generated from the MRRT. Please note that the Bill has yet to be introduced into the Upper House.

More information from Maddocks

For questions or more information about the above article, please call Maddocks in Melbourne (03 9288 0555) and ask for a member of the Superannuation Team.

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[1] The four Minerals Resource Rent Tax Bills are the Minerals Resource Rent Tax Bill 2011, the Minerals Resource Rent Tax (Imposition—Customs) Bill 2011, the Minerals Resource Rent Tax (Imposition—Excise) Bill 2011 and the Minerals Resource Rent Tax (Imposition—General) Bill 2011.