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Yahoo
4 days ago
- Business
- Yahoo
Major superannuation change to give Aussie workers $600,000 boost in weeks
Compulsory superannuation payments will increase in the coming weeks, and the boost will help young Australians retire with nest eggs of more than $600,000. This is nearly triple what some people are retiring with today. The super guarantee rate will increase from 11.5 to 12 per cent from July 1. This is the final legislated increase to the rate that employers are legally required to pay into your superannuation. A 30-year-old with a super balance of $30,000 today who earns the median wage of $75,000 is expected to accumulate a super balance of $610,000 in today's dollars, new research from the Association of Superannuation Funds of Australia (ASFA) found. RELATED $3 million superannuation tax change sparks property warning as 'panic' selling begins $1,831 Centrelink payment change coming within weeks: 'You'll get more' Australia's most in-demand jobs revealed with $125,000 salaries up for grabs: 'Short supply' Compared to previous generations, today's workers will benefit from higher compulsory contributions rates for longer periods of time. The median super balance for 60- to 64-year-old men today is $205,000, while for women in the same age bracket it is $154,000. ASFA found there was strong support for superannuation from younger Australians, despite them being decades away from retirement. It found 77 per cent of the 18 to 34 age bracket believed the compulsory contribution rate should be at least 12 per cent, while 82 per cent agreed or strongly agreed that regular contributions made them feel more confident about their financial future. 'The strong level of satisfaction, trust and confidence younger people feel about their super is encouraging to see as superannuation is often not front-of-mind for younger people,' ASFA CEO Mary Delahunty said. 'This result demonstrates that younger Australians are engaged with superannuation and well aware of its positive contribution in shaping their financial security in retirement.' To achieve a comfortable retirement, ASFA calculated that a single person needs $595,000 in superannuation, while a couple needs $690,000. These figures assume the retiree draws down all their capital and receives a part Age Pension. Super Consumers Australia has calculated Aussies need less in superannuation to retire, with its targets finding a single person needs around $310,000 and a couple around $420,000. ASFA noted that the contribution rate of 12 per cent wouldn't, in itself, guarantee adequate retirement incomes for today's younger workers. Factors like time out of the workforce to have and raise children, along with working in jobs not covered by the compulsory system, like gig economy work, would impact a person's capacity to build up their savings. The super guarantee rate increase to 12 per cent is just one change kicking in from July 1. Superannuation accounts with balances of $3 million or more will see the existing tax rate increase from 15 to 30 per cent on earnings above this threshold, including unrealised capital gains. This change is due to come into effect from July 1 but hasn't yet been legislated. Superannuation will start being paid on Parental Leave Pay from the new financial year. This means parents getting the government support will get an extra 12 per cent of their payment as a contribution to their super fund. The transfer balance cap, which limits the amount of super that can be transferred into the retirement phase, will increase by $100,000 from $1.9 million to $2 million. There has been some misinformation about changes to preservation and withdrawal rules, but the ATO has assured people that this is in retrieving data Sign in to access your portfolio Error in retrieving data
The Advertiser
6 days ago
- The Advertiser
Traveler's warning after pension docked during extended overseas holiday
A 78-year-old was shocked to uncover the government was docking her age pension after an extended holiday to the United State. After six weeks away, Lauren (who wished not to use her real name), noticed her payment was short around $30, then a fortnight later, it was short $50, while the following payment was docked even more. The widow, who was on a trip to visit her son and grandchildren in Tennessee, was only meant to be away for four weeks. But her adult daughter and travelling companion, Jessica, became ill. When her daughter required a small medical procedure, Lauren extended her stay. "I was initially staying for a month, with my daughter going on to do more travelling," she said. "But I wasn't going to leave her in case her condition got worse." Lauren told The Senior she called Centrelink when she arrived home, and they explained pensioners can't leave Australia for more than six weeks without a financial penalty. "And the pension gets reduced more and more - for each week you are away," she said "Older Australians who have worked hard our whole lives get punished for daring to spend more than six weeks out of Australia. It's disgusting." Despite explaining the situation to Centrelink, Lauren was told she wouldn't be reimbursed. But her full pension was reinstated because she was back in the country. "I want everyone to know about this rule. Just because you travel overseas doesn't mean you're rich," Lauren said. "People have direct debits and rely on their pension to pay bills. "It's outrageous." Services Australia Community Information Officer Justin Bott said the rule is called "Age Pension portability" and many factors can affect payment. "How much pension you get changes depending on how long you're away, how long you have lived in Australia or whether you're leaving to live in another country," he said. "If you get the Age Pension and are planning on travelling overseas for longer than six weeks you need to tell Services Australia." The Senior understands the Energy Supplement portion of the Age Pension stops after six weeks and the Pension Supplement keeps reducing until it reaches the basic rate. After 26 weeks overseas, the rate of Age Pension may change - depending on how long a person has lived in Australia between the ages of 16 and when they were eligible to get the pension. Australians will also have their concession card cancelled after six weeks - with a new one issued only when the traveller returns back home and if they are still eligible. "I had a backlog of mail when I got back, and I discovered my new concession card - it was really confusing. There was just no warning," Lauren said. "I am worried other people don't know about it. "I am just lucky I was with relatives and didn't have to worry about finances as much." National Seniors Australia CEO Chris Grice told The Senior he believes the Government thinks people who go overseas must have plenty of money. "You'll find that they're sort of saying, 'Oh, hang on, you're out of the country. You don't need electricity,'" he said. "We all know that's not the case. Not everybody's doing a $40,000 Scenic river cruise," he said. The CEO said Aussies need to be aware that the longer people stay overseas, the more money is docked. "A conversation with Services Australia is pretty important if someone is going for that longer trip," he said. Even if a traveller does not inform Centrelink, their pension will still be docked after six weeks. "Centrelink told me immigration flags the pensioners leaving the country," Lauren said. Shockingly, Age Pension recipients are not the only ones who need to be aware of the "portability" rule. "They're not just singling out the Age Pension. It's any government payment, such as study allowances, carers allowances and disability support," Mr Grice said. But the portability rule is different for the various allowances. For example, the Disability Support Pension can be stricter. Recipients may not be able to spend more than a total of 28 days overseas across a 12-month period. Services Australia recommends anyone receiving a government payment to go to Centrelink to see how their money could be reduced when travelling overseas. A spokesperson for Services Australia said they would reach out to Lauren. Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE. A 78-year-old was shocked to uncover the government was docking her age pension after an extended holiday to the United State. After six weeks away, Lauren (who wished not to use her real name), noticed her payment was short around $30, then a fortnight later, it was short $50, while the following payment was docked even more. The widow, who was on a trip to visit her son and grandchildren in Tennessee, was only meant to be away for four weeks. But her adult daughter and travelling companion, Jessica, became ill. When her daughter required a small medical procedure, Lauren extended her stay. "I was initially staying for a month, with my daughter going on to do more travelling," she said. "But I wasn't going to leave her in case her condition got worse." Lauren told The Senior she called Centrelink when she arrived home, and they explained pensioners can't leave Australia for more than six weeks without a financial penalty. "And the pension gets reduced more and more - for each week you are away," she said "Older Australians who have worked hard our whole lives get punished for daring to spend more than six weeks out of Australia. It's disgusting." Despite explaining the situation to Centrelink, Lauren was told she wouldn't be reimbursed. But her full pension was reinstated because she was back in the country. "I want everyone to know about this rule. Just because you travel overseas doesn't mean you're rich," Lauren said. "People have direct debits and rely on their pension to pay bills. "It's outrageous." Services Australia Community Information Officer Justin Bott said the rule is called "Age Pension portability" and many factors can affect payment. "How much pension you get changes depending on how long you're away, how long you have lived in Australia or whether you're leaving to live in another country," he said. "If you get the Age Pension and are planning on travelling overseas for longer than six weeks you need to tell Services Australia." The Senior understands the Energy Supplement portion of the Age Pension stops after six weeks and the Pension Supplement keeps reducing until it reaches the basic rate. After 26 weeks overseas, the rate of Age Pension may change - depending on how long a person has lived in Australia between the ages of 16 and when they were eligible to get the pension. Australians will also have their concession card cancelled after six weeks - with a new one issued only when the traveller returns back home and if they are still eligible. "I had a backlog of mail when I got back, and I discovered my new concession card - it was really confusing. There was just no warning," Lauren said. "I am worried other people don't know about it. "I am just lucky I was with relatives and didn't have to worry about finances as much." National Seniors Australia CEO Chris Grice told The Senior he believes the Government thinks people who go overseas must have plenty of money. "You'll find that they're sort of saying, 'Oh, hang on, you're out of the country. You don't need electricity,'" he said. "We all know that's not the case. Not everybody's doing a $40,000 Scenic river cruise," he said. The CEO said Aussies need to be aware that the longer people stay overseas, the more money is docked. "A conversation with Services Australia is pretty important if someone is going for that longer trip," he said. Even if a traveller does not inform Centrelink, their pension will still be docked after six weeks. "Centrelink told me immigration flags the pensioners leaving the country," Lauren said. Shockingly, Age Pension recipients are not the only ones who need to be aware of the "portability" rule. "They're not just singling out the Age Pension. It's any government payment, such as study allowances, carers allowances and disability support," Mr Grice said. But the portability rule is different for the various allowances. For example, the Disability Support Pension can be stricter. Recipients may not be able to spend more than a total of 28 days overseas across a 12-month period. Services Australia recommends anyone receiving a government payment to go to Centrelink to see how their money could be reduced when travelling overseas. A spokesperson for Services Australia said they would reach out to Lauren. Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE. A 78-year-old was shocked to uncover the government was docking her age pension after an extended holiday to the United State. After six weeks away, Lauren (who wished not to use her real name), noticed her payment was short around $30, then a fortnight later, it was short $50, while the following payment was docked even more. The widow, who was on a trip to visit her son and grandchildren in Tennessee, was only meant to be away for four weeks. But her adult daughter and travelling companion, Jessica, became ill. When her daughter required a small medical procedure, Lauren extended her stay. "I was initially staying for a month, with my daughter going on to do more travelling," she said. "But I wasn't going to leave her in case her condition got worse." Lauren told The Senior she called Centrelink when she arrived home, and they explained pensioners can't leave Australia for more than six weeks without a financial penalty. "And the pension gets reduced more and more - for each week you are away," she said "Older Australians who have worked hard our whole lives get punished for daring to spend more than six weeks out of Australia. It's disgusting." Despite explaining the situation to Centrelink, Lauren was told she wouldn't be reimbursed. But her full pension was reinstated because she was back in the country. "I want everyone to know about this rule. Just because you travel overseas doesn't mean you're rich," Lauren said. "People have direct debits and rely on their pension to pay bills. "It's outrageous." Services Australia Community Information Officer Justin Bott said the rule is called "Age Pension portability" and many factors can affect payment. "How much pension you get changes depending on how long you're away, how long you have lived in Australia or whether you're leaving to live in another country," he said. "If you get the Age Pension and are planning on travelling overseas for longer than six weeks you need to tell Services Australia." The Senior understands the Energy Supplement portion of the Age Pension stops after six weeks and the Pension Supplement keeps reducing until it reaches the basic rate. After 26 weeks overseas, the rate of Age Pension may change - depending on how long a person has lived in Australia between the ages of 16 and when they were eligible to get the pension. Australians will also have their concession card cancelled after six weeks - with a new one issued only when the traveller returns back home and if they are still eligible. "I had a backlog of mail when I got back, and I discovered my new concession card - it was really confusing. There was just no warning," Lauren said. "I am worried other people don't know about it. "I am just lucky I was with relatives and didn't have to worry about finances as much." National Seniors Australia CEO Chris Grice told The Senior he believes the Government thinks people who go overseas must have plenty of money. "You'll find that they're sort of saying, 'Oh, hang on, you're out of the country. You don't need electricity,'" he said. "We all know that's not the case. Not everybody's doing a $40,000 Scenic river cruise," he said. The CEO said Aussies need to be aware that the longer people stay overseas, the more money is docked. "A conversation with Services Australia is pretty important if someone is going for that longer trip," he said. Even if a traveller does not inform Centrelink, their pension will still be docked after six weeks. "Centrelink told me immigration flags the pensioners leaving the country," Lauren said. Shockingly, Age Pension recipients are not the only ones who need to be aware of the "portability" rule. "They're not just singling out the Age Pension. It's any government payment, such as study allowances, carers allowances and disability support," Mr Grice said. But the portability rule is different for the various allowances. For example, the Disability Support Pension can be stricter. Recipients may not be able to spend more than a total of 28 days overseas across a 12-month period. Services Australia recommends anyone receiving a government payment to go to Centrelink to see how their money could be reduced when travelling overseas. A spokesperson for Services Australia said they would reach out to Lauren. Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE. A 78-year-old was shocked to uncover the government was docking her age pension after an extended holiday to the United State. After six weeks away, Lauren (who wished not to use her real name), noticed her payment was short around $30, then a fortnight later, it was short $50, while the following payment was docked even more. The widow, who was on a trip to visit her son and grandchildren in Tennessee, was only meant to be away for four weeks. But her adult daughter and travelling companion, Jessica, became ill. When her daughter required a small medical procedure, Lauren extended her stay. "I was initially staying for a month, with my daughter going on to do more travelling," she said. "But I wasn't going to leave her in case her condition got worse." Lauren told The Senior she called Centrelink when she arrived home, and they explained pensioners can't leave Australia for more than six weeks without a financial penalty. "And the pension gets reduced more and more - for each week you are away," she said "Older Australians who have worked hard our whole lives get punished for daring to spend more than six weeks out of Australia. It's disgusting." Despite explaining the situation to Centrelink, Lauren was told she wouldn't be reimbursed. But her full pension was reinstated because she was back in the country. "I want everyone to know about this rule. Just because you travel overseas doesn't mean you're rich," Lauren said. "People have direct debits and rely on their pension to pay bills. "It's outrageous." Services Australia Community Information Officer Justin Bott said the rule is called "Age Pension portability" and many factors can affect payment. "How much pension you get changes depending on how long you're away, how long you have lived in Australia or whether you're leaving to live in another country," he said. "If you get the Age Pension and are planning on travelling overseas for longer than six weeks you need to tell Services Australia." The Senior understands the Energy Supplement portion of the Age Pension stops after six weeks and the Pension Supplement keeps reducing until it reaches the basic rate. After 26 weeks overseas, the rate of Age Pension may change - depending on how long a person has lived in Australia between the ages of 16 and when they were eligible to get the pension. Australians will also have their concession card cancelled after six weeks - with a new one issued only when the traveller returns back home and if they are still eligible. "I had a backlog of mail when I got back, and I discovered my new concession card - it was really confusing. There was just no warning," Lauren said. "I am worried other people don't know about it. "I am just lucky I was with relatives and didn't have to worry about finances as much." National Seniors Australia CEO Chris Grice told The Senior he believes the Government thinks people who go overseas must have plenty of money. "You'll find that they're sort of saying, 'Oh, hang on, you're out of the country. You don't need electricity,'" he said. "We all know that's not the case. Not everybody's doing a $40,000 Scenic river cruise," he said. The CEO said Aussies need to be aware that the longer people stay overseas, the more money is docked. "A conversation with Services Australia is pretty important if someone is going for that longer trip," he said. Even if a traveller does not inform Centrelink, their pension will still be docked after six weeks. "Centrelink told me immigration flags the pensioners leaving the country," Lauren said. Shockingly, Age Pension recipients are not the only ones who need to be aware of the "portability" rule. "They're not just singling out the Age Pension. It's any government payment, such as study allowances, carers allowances and disability support," Mr Grice said. But the portability rule is different for the various allowances. For example, the Disability Support Pension can be stricter. Recipients may not be able to spend more than a total of 28 days overseas across a 12-month period. Services Australia recommends anyone receiving a government payment to go to Centrelink to see how their money could be reduced when travelling overseas. A spokesperson for Services Australia said they would reach out to Lauren. Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE.
The Advertiser
6 days ago
- Business
- The Advertiser
Pensioners left hanging as government signals deeming freeze to end
Asset tests affecting age pensioners look set to change in weeks with a freeze on deeming rates to end, despite advocacy groups calling for an extension as Australians struggle with the cost-of-living. Deeming rules assume financial assets earn a specific rate of income, regardless of their actual return, and means test how much pension a person receives as well as eligibility for the Commonwealth Seniors Health Card (CSHC) and aged care fees. If the rates change and some people are deemed to earn more, this will affect how much pension they could take home, or even the concessions they are eligible for under the CSHC. Read more from The Senior Last year, the federal government announced an extension of the deeming rate freeze until June 30, 2025, but no additional extension was announced in this year's budget - meaning thousands of pensioners could see a change in their bank accounts come July 1. The Senior sent questions to Social Services Minister Tanya Plibersek but a department spokesperson responded, seemingly confirming the freeze is to end. "The Government has frozen the deeming rates until June 30, 2025," the spokesperson said. "Regardless of the end of the freeze, the deeming rates can only be changed by a decision of the Minister for Social Services. There has been no decision to change the deeming rates from their current levels." The spokesperson's comments echoed comments those from former Social Services Minister Amanda Rishworth, just prior to Federal Election in May. "The expiry of the deeming rates freeze does not mean the deeming rates will increase automatically after 30 June, 2025. A decision of the Government would be required to change the deeming rate settings." Deeming rates have remained steady at 0.25 per cent for the first $62,600 worth of assets for single pensioners, and 2.25 per cent for anything above that threshold since the freeze was put in place. However, the Reserve Bank cash rate has risen considerably over the past five years. It sat at 0.25 per cent in May 2020 but currently sits at 3.85 per cent. It had risen to 4.10 per cent prior to a cut to the cash rate on May 20. National Seniors has also called for the scrapping of the work bonus, which determines how much someone on the Age Pension can earn before it affects their pension. Instead, the organisation would like to see workers claim a full pension and then pay a reasonable tax rate on top of that. But the Social Services spokesperson said income and asset tests were an important part of the system. "Australia's social security system is a non-contributory resident-based system. For this reason, payments including the Age Pension are targeted to those most in need through income and asset tests," they said. "The Work Bonus benefits Age Pensioners who can and want to work, by disregarding the first $300 they earn from employment each fortnight from the income test. "Pensioners can build up any unused amount of the $300 in a Work Bonus income bank, up to a maximum of $11,800, to offset future work." Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE. Asset tests affecting age pensioners look set to change in weeks with a freeze on deeming rates to end, despite advocacy groups calling for an extension as Australians struggle with the cost-of-living. Deeming rules assume financial assets earn a specific rate of income, regardless of their actual return, and means test how much pension a person receives as well as eligibility for the Commonwealth Seniors Health Card (CSHC) and aged care fees. If the rates change and some people are deemed to earn more, this will affect how much pension they could take home, or even the concessions they are eligible for under the CSHC. Read more from The Senior Last year, the federal government announced an extension of the deeming rate freeze until June 30, 2025, but no additional extension was announced in this year's budget - meaning thousands of pensioners could see a change in their bank accounts come July 1. The Senior sent questions to Social Services Minister Tanya Plibersek but a department spokesperson responded, seemingly confirming the freeze is to end. "The Government has frozen the deeming rates until June 30, 2025," the spokesperson said. "Regardless of the end of the freeze, the deeming rates can only be changed by a decision of the Minister for Social Services. There has been no decision to change the deeming rates from their current levels." The spokesperson's comments echoed comments those from former Social Services Minister Amanda Rishworth, just prior to Federal Election in May. "The expiry of the deeming rates freeze does not mean the deeming rates will increase automatically after 30 June, 2025. A decision of the Government would be required to change the deeming rate settings." Deeming rates have remained steady at 0.25 per cent for the first $62,600 worth of assets for single pensioners, and 2.25 per cent for anything above that threshold since the freeze was put in place. However, the Reserve Bank cash rate has risen considerably over the past five years. It sat at 0.25 per cent in May 2020 but currently sits at 3.85 per cent. It had risen to 4.10 per cent prior to a cut to the cash rate on May 20. National Seniors has also called for the scrapping of the work bonus, which determines how much someone on the Age Pension can earn before it affects their pension. Instead, the organisation would like to see workers claim a full pension and then pay a reasonable tax rate on top of that. But the Social Services spokesperson said income and asset tests were an important part of the system. "Australia's social security system is a non-contributory resident-based system. For this reason, payments including the Age Pension are targeted to those most in need through income and asset tests," they said. "The Work Bonus benefits Age Pensioners who can and want to work, by disregarding the first $300 they earn from employment each fortnight from the income test. "Pensioners can build up any unused amount of the $300 in a Work Bonus income bank, up to a maximum of $11,800, to offset future work." Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE. Asset tests affecting age pensioners look set to change in weeks with a freeze on deeming rates to end, despite advocacy groups calling for an extension as Australians struggle with the cost-of-living. Deeming rules assume financial assets earn a specific rate of income, regardless of their actual return, and means test how much pension a person receives as well as eligibility for the Commonwealth Seniors Health Card (CSHC) and aged care fees. If the rates change and some people are deemed to earn more, this will affect how much pension they could take home, or even the concessions they are eligible for under the CSHC. Read more from The Senior Last year, the federal government announced an extension of the deeming rate freeze until June 30, 2025, but no additional extension was announced in this year's budget - meaning thousands of pensioners could see a change in their bank accounts come July 1. The Senior sent questions to Social Services Minister Tanya Plibersek but a department spokesperson responded, seemingly confirming the freeze is to end. "The Government has frozen the deeming rates until June 30, 2025," the spokesperson said. "Regardless of the end of the freeze, the deeming rates can only be changed by a decision of the Minister for Social Services. There has been no decision to change the deeming rates from their current levels." The spokesperson's comments echoed comments those from former Social Services Minister Amanda Rishworth, just prior to Federal Election in May. "The expiry of the deeming rates freeze does not mean the deeming rates will increase automatically after 30 June, 2025. A decision of the Government would be required to change the deeming rate settings." Deeming rates have remained steady at 0.25 per cent for the first $62,600 worth of assets for single pensioners, and 2.25 per cent for anything above that threshold since the freeze was put in place. However, the Reserve Bank cash rate has risen considerably over the past five years. It sat at 0.25 per cent in May 2020 but currently sits at 3.85 per cent. It had risen to 4.10 per cent prior to a cut to the cash rate on May 20. National Seniors has also called for the scrapping of the work bonus, which determines how much someone on the Age Pension can earn before it affects their pension. Instead, the organisation would like to see workers claim a full pension and then pay a reasonable tax rate on top of that. But the Social Services spokesperson said income and asset tests were an important part of the system. "Australia's social security system is a non-contributory resident-based system. For this reason, payments including the Age Pension are targeted to those most in need through income and asset tests," they said. "The Work Bonus benefits Age Pensioners who can and want to work, by disregarding the first $300 they earn from employment each fortnight from the income test. "Pensioners can build up any unused amount of the $300 in a Work Bonus income bank, up to a maximum of $11,800, to offset future work." Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE. Asset tests affecting age pensioners look set to change in weeks with a freeze on deeming rates to end, despite advocacy groups calling for an extension as Australians struggle with the cost-of-living. Deeming rules assume financial assets earn a specific rate of income, regardless of their actual return, and means test how much pension a person receives as well as eligibility for the Commonwealth Seniors Health Card (CSHC) and aged care fees. If the rates change and some people are deemed to earn more, this will affect how much pension they could take home, or even the concessions they are eligible for under the CSHC. Read more from The Senior Last year, the federal government announced an extension of the deeming rate freeze until June 30, 2025, but no additional extension was announced in this year's budget - meaning thousands of pensioners could see a change in their bank accounts come July 1. The Senior sent questions to Social Services Minister Tanya Plibersek but a department spokesperson responded, seemingly confirming the freeze is to end. "The Government has frozen the deeming rates until June 30, 2025," the spokesperson said. "Regardless of the end of the freeze, the deeming rates can only be changed by a decision of the Minister for Social Services. There has been no decision to change the deeming rates from their current levels." The spokesperson's comments echoed comments those from former Social Services Minister Amanda Rishworth, just prior to Federal Election in May. "The expiry of the deeming rates freeze does not mean the deeming rates will increase automatically after 30 June, 2025. A decision of the Government would be required to change the deeming rate settings." Deeming rates have remained steady at 0.25 per cent for the first $62,600 worth of assets for single pensioners, and 2.25 per cent for anything above that threshold since the freeze was put in place. However, the Reserve Bank cash rate has risen considerably over the past five years. It sat at 0.25 per cent in May 2020 but currently sits at 3.85 per cent. It had risen to 4.10 per cent prior to a cut to the cash rate on May 20. National Seniors has also called for the scrapping of the work bonus, which determines how much someone on the Age Pension can earn before it affects their pension. Instead, the organisation would like to see workers claim a full pension and then pay a reasonable tax rate on top of that. But the Social Services spokesperson said income and asset tests were an important part of the system. "Australia's social security system is a non-contributory resident-based system. For this reason, payments including the Age Pension are targeted to those most in need through income and asset tests," they said. "The Work Bonus benefits Age Pensioners who can and want to work, by disregarding the first $300 they earn from employment each fortnight from the income test. "Pensioners can build up any unused amount of the $300 in a Work Bonus income bank, up to a maximum of $11,800, to offset future work." Share your thoughts in the comments below, or send a Letter to the Editor by CLICKING HERE.
The Advertiser
23-05-2025
- Business
- The Advertiser
Why you shouldn't be scared of these super changes
The election might be over, but the next big scare campaign is just getting started. The subject this time is the Albanese government's planned changes to taxes on superannuation. There seems to be an endless supply of news articles on this topic, ranging from concerned tutting to full-blown doomsaying and accusations of class war. Almost all this coverage misses the mark; these changes, while modest, are an important first step in reforming Australia's broken and unequal superannuation system. So, what's changing? Currently, most people get a tax concession on their superannuation earnings (the money made by your super investments). Rather than being taxed at your marginal tax rate, the money made from your super investments is only taxed at 15 per cent. That is a lot less than the top income tax rate of 45 per cent (plus the Medicare levy). But the government is proposing to raise the tax on superannuation balances of over $3 million. These people will pay an additional 15 per cent on earnings. Importantly though, it is only on the amount above $3 million. For instance, if you have $4 million in super, you will only pay additional tax on a quarter of your earnings. The tax is projected to raise $2.3 billion in its first full year, and $40 billion over a decade. If $3 million in super sounds like a lot of money; that's because it is. Very few of us have anywhere near that amount of super. According to Treasury, the tax will initially affect 80,000 people or one in 200 (0.5 per cent) super account holders. For comparison, according to the most recent Tax Office data, less than half of people in their 60s have more than $250,000 in super. To be clear, this is a modest change to a broken system. Superannuation tax concessions were originally justified to help people save for a comfortable retirement. But they have become a tax avoidance machine that funnels money to the top and subsidises inheritances for rich families. Tax concessions on superannuation cost the government about $60 billion every year, nearly as much as the Age Pension. They disproportionately benefit high-income earners, with more flowing to the top 10 per cent ($22 billion) than the bottom 70 per cent combined. Crucially, the $2.3 billion raised by this reform is a lot smaller than the $22 billion the top 10% currently receive in tax concessions. Even after the changes, superannuation tax concessions will still disproportionately benefit high-income earners. So, what's all the fuss about? The most common criticism is that the $3 million threshold is not 'indexed' to inflation, and so although only the very, very rich have $3 million in super at the moment, with time it might be a lot more of us. This is greatly overblown; according to Treasury modelling even in 30 years, only the top 10 per cent of taxpayers may have to pay any additional tax at all. Also, a future government can always just raise the bracket if they want to. Income tax brackets are not indexed either, and governments change them regularly. Yet commentators are acting like taxes on super can't ever again be adjusted, with some making claims that the tax will affect many Gen Z people when they retire ... in 40 years! History shows how silly this is. Australia's income tax brackets have changed drastically and frequently in the last 40 years. If Australia had the same tax brackets now as it did 40 years ago, anyone earning over $36,000 a year would be in the top tax bracket of 60 per cent - including anyone in a minimum wage job working full-time, and even some working part-time. If people are truly concerned about this "indexation issue", they could simply support the Greens' amendment to lower the threshold to $2 million and index this amount to inflation. This would still only affect the very rich. According to the most recent Tax Office data, less than one in 100 (0.6 per cent) of super account holders have more than $2 million in superannuation. For those that are truly concerned with the welfare and future of Gen Z, there are better priorities than speculating that in 40 years they maybe ... might ... if you include some questionable assumptions ... pay a bit more tax. For instance, climate change will certainly drastically impact their lives, yet Australia continues to intensify this crisis, continuing to expand fossil fuel projects and spending over $10 billion on fossil fuel subsidies every year. Another issue raising much scaremongering is that the tax will apply to "unrealised capital gains". Capital gains are when the value of an asset (such a property) rises. 'Unrealised' means that the asset hasn't been sold yet. Critics seem to think this is inherently unfair, but unrealised capital gains are a real form of income. For instance, if the value of your assets rises, you can borrow against this value regardless of whether you've sold them yet. Others speculate that this will somehow undermine or crash the economy. Much analysis fails to recognise that Australia already has an effective tax on unrealised capital gains: the asset test on the Age Pension. If the value of your assets rises, the amount of Age Pension you can receive drops; in economic terms, this works the same way as a tax, yet the Australian economy has somehow survived. READ MORE: Lastly, there are concerns that this will harm people with small businesses or farms. This is only true if people are currently holding their business or farm in their super account. Why would people do this? Because the huge tax concessions on superannuation encourages people to pile all their assets into their super account to avoid paying tax. This is not the purpose of superannuation, and definitely not the purpose of the tax concessions. These changes will not fully fix the superannuation system, but nor will they crash the economy, bankrupt Gen Z, or destroy farmers and small business owners. They are, however, an important first step in reducing inequality in Australia. The election might be over, but the next big scare campaign is just getting started. The subject this time is the Albanese government's planned changes to taxes on superannuation. There seems to be an endless supply of news articles on this topic, ranging from concerned tutting to full-blown doomsaying and accusations of class war. Almost all this coverage misses the mark; these changes, while modest, are an important first step in reforming Australia's broken and unequal superannuation system. So, what's changing? Currently, most people get a tax concession on their superannuation earnings (the money made by your super investments). Rather than being taxed at your marginal tax rate, the money made from your super investments is only taxed at 15 per cent. That is a lot less than the top income tax rate of 45 per cent (plus the Medicare levy). But the government is proposing to raise the tax on superannuation balances of over $3 million. These people will pay an additional 15 per cent on earnings. Importantly though, it is only on the amount above $3 million. For instance, if you have $4 million in super, you will only pay additional tax on a quarter of your earnings. The tax is projected to raise $2.3 billion in its first full year, and $40 billion over a decade. If $3 million in super sounds like a lot of money; that's because it is. Very few of us have anywhere near that amount of super. According to Treasury, the tax will initially affect 80,000 people or one in 200 (0.5 per cent) super account holders. For comparison, according to the most recent Tax Office data, less than half of people in their 60s have more than $250,000 in super. To be clear, this is a modest change to a broken system. Superannuation tax concessions were originally justified to help people save for a comfortable retirement. But they have become a tax avoidance machine that funnels money to the top and subsidises inheritances for rich families. Tax concessions on superannuation cost the government about $60 billion every year, nearly as much as the Age Pension. They disproportionately benefit high-income earners, with more flowing to the top 10 per cent ($22 billion) than the bottom 70 per cent combined. Crucially, the $2.3 billion raised by this reform is a lot smaller than the $22 billion the top 10% currently receive in tax concessions. Even after the changes, superannuation tax concessions will still disproportionately benefit high-income earners. So, what's all the fuss about? The most common criticism is that the $3 million threshold is not 'indexed' to inflation, and so although only the very, very rich have $3 million in super at the moment, with time it might be a lot more of us. This is greatly overblown; according to Treasury modelling even in 30 years, only the top 10 per cent of taxpayers may have to pay any additional tax at all. Also, a future government can always just raise the bracket if they want to. Income tax brackets are not indexed either, and governments change them regularly. Yet commentators are acting like taxes on super can't ever again be adjusted, with some making claims that the tax will affect many Gen Z people when they retire ... in 40 years! History shows how silly this is. Australia's income tax brackets have changed drastically and frequently in the last 40 years. If Australia had the same tax brackets now as it did 40 years ago, anyone earning over $36,000 a year would be in the top tax bracket of 60 per cent - including anyone in a minimum wage job working full-time, and even some working part-time. If people are truly concerned about this "indexation issue", they could simply support the Greens' amendment to lower the threshold to $2 million and index this amount to inflation. This would still only affect the very rich. According to the most recent Tax Office data, less than one in 100 (0.6 per cent) of super account holders have more than $2 million in superannuation. For those that are truly concerned with the welfare and future of Gen Z, there are better priorities than speculating that in 40 years they maybe ... might ... if you include some questionable assumptions ... pay a bit more tax. For instance, climate change will certainly drastically impact their lives, yet Australia continues to intensify this crisis, continuing to expand fossil fuel projects and spending over $10 billion on fossil fuel subsidies every year. Another issue raising much scaremongering is that the tax will apply to "unrealised capital gains". Capital gains are when the value of an asset (such a property) rises. 'Unrealised' means that the asset hasn't been sold yet. Critics seem to think this is inherently unfair, but unrealised capital gains are a real form of income. For instance, if the value of your assets rises, you can borrow against this value regardless of whether you've sold them yet. Others speculate that this will somehow undermine or crash the economy. Much analysis fails to recognise that Australia already has an effective tax on unrealised capital gains: the asset test on the Age Pension. If the value of your assets rises, the amount of Age Pension you can receive drops; in economic terms, this works the same way as a tax, yet the Australian economy has somehow survived. READ MORE: Lastly, there are concerns that this will harm people with small businesses or farms. This is only true if people are currently holding their business or farm in their super account. Why would people do this? Because the huge tax concessions on superannuation encourages people to pile all their assets into their super account to avoid paying tax. This is not the purpose of superannuation, and definitely not the purpose of the tax concessions. These changes will not fully fix the superannuation system, but nor will they crash the economy, bankrupt Gen Z, or destroy farmers and small business owners. They are, however, an important first step in reducing inequality in Australia. The election might be over, but the next big scare campaign is just getting started. The subject this time is the Albanese government's planned changes to taxes on superannuation. There seems to be an endless supply of news articles on this topic, ranging from concerned tutting to full-blown doomsaying and accusations of class war. Almost all this coverage misses the mark; these changes, while modest, are an important first step in reforming Australia's broken and unequal superannuation system. So, what's changing? Currently, most people get a tax concession on their superannuation earnings (the money made by your super investments). Rather than being taxed at your marginal tax rate, the money made from your super investments is only taxed at 15 per cent. That is a lot less than the top income tax rate of 45 per cent (plus the Medicare levy). But the government is proposing to raise the tax on superannuation balances of over $3 million. These people will pay an additional 15 per cent on earnings. Importantly though, it is only on the amount above $3 million. For instance, if you have $4 million in super, you will only pay additional tax on a quarter of your earnings. The tax is projected to raise $2.3 billion in its first full year, and $40 billion over a decade. If $3 million in super sounds like a lot of money; that's because it is. Very few of us have anywhere near that amount of super. According to Treasury, the tax will initially affect 80,000 people or one in 200 (0.5 per cent) super account holders. For comparison, according to the most recent Tax Office data, less than half of people in their 60s have more than $250,000 in super. To be clear, this is a modest change to a broken system. Superannuation tax concessions were originally justified to help people save for a comfortable retirement. But they have become a tax avoidance machine that funnels money to the top and subsidises inheritances for rich families. Tax concessions on superannuation cost the government about $60 billion every year, nearly as much as the Age Pension. They disproportionately benefit high-income earners, with more flowing to the top 10 per cent ($22 billion) than the bottom 70 per cent combined. Crucially, the $2.3 billion raised by this reform is a lot smaller than the $22 billion the top 10% currently receive in tax concessions. Even after the changes, superannuation tax concessions will still disproportionately benefit high-income earners. So, what's all the fuss about? The most common criticism is that the $3 million threshold is not 'indexed' to inflation, and so although only the very, very rich have $3 million in super at the moment, with time it might be a lot more of us. This is greatly overblown; according to Treasury modelling even in 30 years, only the top 10 per cent of taxpayers may have to pay any additional tax at all. Also, a future government can always just raise the bracket if they want to. Income tax brackets are not indexed either, and governments change them regularly. Yet commentators are acting like taxes on super can't ever again be adjusted, with some making claims that the tax will affect many Gen Z people when they retire ... in 40 years! History shows how silly this is. Australia's income tax brackets have changed drastically and frequently in the last 40 years. If Australia had the same tax brackets now as it did 40 years ago, anyone earning over $36,000 a year would be in the top tax bracket of 60 per cent - including anyone in a minimum wage job working full-time, and even some working part-time. If people are truly concerned about this "indexation issue", they could simply support the Greens' amendment to lower the threshold to $2 million and index this amount to inflation. This would still only affect the very rich. According to the most recent Tax Office data, less than one in 100 (0.6 per cent) of super account holders have more than $2 million in superannuation. For those that are truly concerned with the welfare and future of Gen Z, there are better priorities than speculating that in 40 years they maybe ... might ... if you include some questionable assumptions ... pay a bit more tax. For instance, climate change will certainly drastically impact their lives, yet Australia continues to intensify this crisis, continuing to expand fossil fuel projects and spending over $10 billion on fossil fuel subsidies every year. Another issue raising much scaremongering is that the tax will apply to "unrealised capital gains". Capital gains are when the value of an asset (such a property) rises. 'Unrealised' means that the asset hasn't been sold yet. Critics seem to think this is inherently unfair, but unrealised capital gains are a real form of income. For instance, if the value of your assets rises, you can borrow against this value regardless of whether you've sold them yet. Others speculate that this will somehow undermine or crash the economy. Much analysis fails to recognise that Australia already has an effective tax on unrealised capital gains: the asset test on the Age Pension. If the value of your assets rises, the amount of Age Pension you can receive drops; in economic terms, this works the same way as a tax, yet the Australian economy has somehow survived. READ MORE: Lastly, there are concerns that this will harm people with small businesses or farms. This is only true if people are currently holding their business or farm in their super account. Why would people do this? Because the huge tax concessions on superannuation encourages people to pile all their assets into their super account to avoid paying tax. This is not the purpose of superannuation, and definitely not the purpose of the tax concessions. These changes will not fully fix the superannuation system, but nor will they crash the economy, bankrupt Gen Z, or destroy farmers and small business owners. They are, however, an important first step in reducing inequality in Australia. The election might be over, but the next big scare campaign is just getting started. The subject this time is the Albanese government's planned changes to taxes on superannuation. There seems to be an endless supply of news articles on this topic, ranging from concerned tutting to full-blown doomsaying and accusations of class war. Almost all this coverage misses the mark; these changes, while modest, are an important first step in reforming Australia's broken and unequal superannuation system. So, what's changing? Currently, most people get a tax concession on their superannuation earnings (the money made by your super investments). Rather than being taxed at your marginal tax rate, the money made from your super investments is only taxed at 15 per cent. That is a lot less than the top income tax rate of 45 per cent (plus the Medicare levy). But the government is proposing to raise the tax on superannuation balances of over $3 million. These people will pay an additional 15 per cent on earnings. Importantly though, it is only on the amount above $3 million. For instance, if you have $4 million in super, you will only pay additional tax on a quarter of your earnings. The tax is projected to raise $2.3 billion in its first full year, and $40 billion over a decade. If $3 million in super sounds like a lot of money; that's because it is. Very few of us have anywhere near that amount of super. According to Treasury, the tax will initially affect 80,000 people or one in 200 (0.5 per cent) super account holders. For comparison, according to the most recent Tax Office data, less than half of people in their 60s have more than $250,000 in super. To be clear, this is a modest change to a broken system. Superannuation tax concessions were originally justified to help people save for a comfortable retirement. But they have become a tax avoidance machine that funnels money to the top and subsidises inheritances for rich families. Tax concessions on superannuation cost the government about $60 billion every year, nearly as much as the Age Pension. They disproportionately benefit high-income earners, with more flowing to the top 10 per cent ($22 billion) than the bottom 70 per cent combined. Crucially, the $2.3 billion raised by this reform is a lot smaller than the $22 billion the top 10% currently receive in tax concessions. Even after the changes, superannuation tax concessions will still disproportionately benefit high-income earners. So, what's all the fuss about? The most common criticism is that the $3 million threshold is not 'indexed' to inflation, and so although only the very, very rich have $3 million in super at the moment, with time it might be a lot more of us. This is greatly overblown; according to Treasury modelling even in 30 years, only the top 10 per cent of taxpayers may have to pay any additional tax at all. Also, a future government can always just raise the bracket if they want to. Income tax brackets are not indexed either, and governments change them regularly. Yet commentators are acting like taxes on super can't ever again be adjusted, with some making claims that the tax will affect many Gen Z people when they retire ... in 40 years! History shows how silly this is. Australia's income tax brackets have changed drastically and frequently in the last 40 years. If Australia had the same tax brackets now as it did 40 years ago, anyone earning over $36,000 a year would be in the top tax bracket of 60 per cent - including anyone in a minimum wage job working full-time, and even some working part-time. If people are truly concerned about this "indexation issue", they could simply support the Greens' amendment to lower the threshold to $2 million and index this amount to inflation. This would still only affect the very rich. According to the most recent Tax Office data, less than one in 100 (0.6 per cent) of super account holders have more than $2 million in superannuation. For those that are truly concerned with the welfare and future of Gen Z, there are better priorities than speculating that in 40 years they maybe ... might ... if you include some questionable assumptions ... pay a bit more tax. For instance, climate change will certainly drastically impact their lives, yet Australia continues to intensify this crisis, continuing to expand fossil fuel projects and spending over $10 billion on fossil fuel subsidies every year. Another issue raising much scaremongering is that the tax will apply to "unrealised capital gains". Capital gains are when the value of an asset (such a property) rises. 'Unrealised' means that the asset hasn't been sold yet. Critics seem to think this is inherently unfair, but unrealised capital gains are a real form of income. For instance, if the value of your assets rises, you can borrow against this value regardless of whether you've sold them yet. Others speculate that this will somehow undermine or crash the economy. Much analysis fails to recognise that Australia already has an effective tax on unrealised capital gains: the asset test on the Age Pension. If the value of your assets rises, the amount of Age Pension you can receive drops; in economic terms, this works the same way as a tax, yet the Australian economy has somehow survived. READ MORE: Lastly, there are concerns that this will harm people with small businesses or farms. This is only true if people are currently holding their business or farm in their super account. Why would people do this? Because the huge tax concessions on superannuation encourages people to pile all their assets into their super account to avoid paying tax. This is not the purpose of superannuation, and definitely not the purpose of the tax concessions. These changes will not fully fix the superannuation system, but nor will they crash the economy, bankrupt Gen Z, or destroy farmers and small business owners. They are, however, an important first step in reducing inequality in Australia.
Yahoo
20-05-2025
- Business
- Yahoo
Warning over banks denying $91 mortgage relief as rate cut looms: ‘It's your right'
Mortgage holders are being urged not to 'sit back and cop it' if their bank doesn't pass on impending interest rate cuts. The Reserve Bank of Australia (RBA) is widely expected to cut the cash rate at its Tuesday meeting, with economists and markets pointing to a 25 basis point cut. Banks, including the Big Four, were quick to pass on the February rate cut to customers in full and experts believe they will follow the same pattern should there be a cut today. A 25 basis point cut would lower repayments by $91 a month on the average $600,000 loan with 25 years remaining. Canstar data insights director Sally Tindall told Yahoo Finance she expects the 'majority' of lenders will pass on a cut in full to variable customers, with several banks already cutting fixed rates ahead of the meeting. RELATED Sign RBA has to make 50 basis interest rate cut: 'Unnecessary pain' Commonwealth Bank boss pours cold water on supersized $181 RBA interest rate cut Centrelink issues urgent Age Pension eligibility change warning: 'Double check''That's certainly what they should do, because the banks know better than most just how tough it has been for these customers over the last couple of years as higher rates and a higher cost of living have put pressure on their household budgets,' she said. 'In February, the vast majority of lenders chose to pass the RBA cut on in full, however, Virgin Money chose not to and its variable rate customers understandably responded in anger.' Mozo banking and rates expert Peter Marshall also thinks lenders will largely pass on the whole cut if one happens on Tuesday and they will act quickly. 'There's been increased scrutiny of the behaviour of a range of businesses, mostly banks and supermarkets, as part of the cost of living issue so I think banks will be reluctant to do anything to attract unnecessary media attention,' he told Yahoo Finance. While the majority of lenders are expected to pass on a cut, there's always a risk some could follow Virgin Money's lead and deny mortgage holders relief. Tindall and Marshall both urged homeowners not to take this lying down and to hunt around for a better deal. 'Should any lender opt to keep part of an RBA cut for themselves, customers should know they do not have to sit back and cop it,' Tindall said. 'If you're on a variable rate, it's your right to pick up your mortgage and take it to a lender willing to offer you a better deal.' Marshall urged customers to keep a close eye out for when their bank announces its reaction and be ready to find a better offer if they don't pass on the full cut. "It's also anticipated that banks would similarly pass on any rate reductions to their savings account customers, leading to lower returns for depositors, so again, be ready to shop around for more competitive rates so you can get the best possible return on your money,' he said. Tindall noted that borrowers no longer had to pay mortgage exit fees, but may face a state mortgage discharge fee, state government fees and potentially an upfront fee from their new lender, which may be negotiable. 'While this might seem like a stumbling block, these fees typically range between $1,000 and $1,500 in total and what many refinancers find is that they make this money back through fewer interest charges in a matter of months,' Tindall said. Commonwealth Bank, Westpac and ANZ are expecting three interest rate cuts are on the cards for the rest of the rate-cutting cycle. NAB has gone against the pack and expects five cuts, with May expected to be a supersized 50 basis point cut. Tindall told Yahoo Finance that banks might not be as generous with future rate cuts in the cycle. 'If we see a total of three, potentially four or five more rate cuts in the cycle then yes, it's quite possible lenders will stop passing on full rate cuts to their variable customers and you don't need to look too far back in history for evidence of this kind of decision making by the banks,' she said. The RBA has cut the cash rate 11 times over the last 10 years, including February's rate cut. Of those, only five were passed on in full by CBA, NAB and ANZ, with Westpac only passing on three in full. In comparison, the Big Four banks have passed on all 13 of the RBA's interest rate hikes since 2022 in in to access your portfolio
