“Low-income earners will be worse off following changes to changes to superannuation that have been agreed this week in Federal Parliament,” says Ian Day, CEO of COTA NSW.
On Tuesday the government agreed to freeze superannuation contributions at 9.5 per cent of salary for seven years. It also agreed to axe the low-income super contribution after 2017. This had ‘topped up’ the superannuation of those earning under $37,000 per year.
“Economic modelling shows that the axing of the low-income super rebate will have a significant effect on low income-earners. Following this change, a person who works from age 22 to 69 on $35,000 per year will retire with 16.7 per cent less than they otherwise would have, according to reputable analysts,” says Mr Day.
“The demise of the low-income super contribution is very disappointing. However, there are other issues to address in relation to super. The entire system needs review.”
“We explored the ways that the Australian superannuation system affects people of different incomes at our Parliamentary Forum earlier this year. Both Ben Spies-Butcher and Rafal Chomik offered fantastic presentations on how our current system works – or fails to work – for retirees. To get an insight into steps we could take to create a more equitable and sustainable super system I encourage people to go to view their presentations.”