Super targeted for Budget savings

As expected, superannuation has taken a major hit in the Federal Budget, with the Government aiming to save around $4.2 billion over four years by altering salary sacrificing and co-contribution arrangements.

In a move that is unlikely to please the superannuation industry, the Federal Treasurer, Wayne Swan, effectively wound back some of the more generous elements of the former Howard Government’s so-called ‘Better Super’ package.

In doing so, he said: “The Government will reduce the generosity of some superannuation concessions for those with greater private wealth.

“The cap on concessional super contributions will be lowered and the matching rate of the superannuation co-contribution will be reduced temporarily,” he said.

Treasury spokesmen pointed out that the move was the largest saving in the Budget for 2009-10, with the cap being halved to $50,000 for people aged over 50 and to $25,000 for the rest of the population.

Where the co-contribution is concerned, the Government has lowered the matching rate from $1.50 for each dollar contributed to a maximum of $1,500 to just dollar for dollar to a maximum of $1,000.

It is intended that this arrangement be temporary and that the co-contribution be gradually increased back up to $1.25 for each $1 contributed to a maximum of $1,250 in the 2012-13 financial year.

By Mike Taylor