30 March, 2022
On Tuesday 29 March 2022, the federal government released its 2022-23 Budget.
Overview of the 2022-23 federal Budget announcements
Announcements in this year’s Budget had a strong focus on creating jobs and lowering unemployment, cost of living relief, and investing in defence and security, health, education, women’s safety, essential services and infrastructure.
The following summary provides highlights of the Budget announcements that relate to superannuation and retirement, noting there was only one industry-wide superannuation measure announced. We welcome the approach taken by the government to allow time for other recently announced superannuation reforms to take effect.
Additional detail on other Budget measures can be found at https://budget.gov.au. It’s important to remember that the announcements are subject to legislative processes to take effect.
Extension of the temporary reduction in superannuation minimum drawdown rates
The government specifies the minimum amount that needs to be drawn each year from account-based pensions and similar products, including superannuation Income accounts. The annual minimum was halved by the government in March 2020 in response to COVID-19. In this year’s Budget, the government announced it would again extend the 50 per cent reduction of the minimum drawdown requirement for a further year to 30 June 2023. See table below.
|Age||Annual minimum (1 July 2019 – proposed to 30 June 2023)||Annual minimum (Proposed from 1 July 2023 onwards)|
Previous Budget measures to come into effect in 2022
The Budget recapped a number of measures due to come into effect in 2022 that the government notes aim to ensure the superannuation system supports women’s economic security in retirement.
Removing the $450 per month income threshold
Legislation will come into effect on 1 July 2022 that removes the $450 per month income threshold that employees currently need to earn to be paid the superannuation guarantee by their employer. The government notes the measure will improve the retirement savings of around 300,000 lower income workers per month, 200,000 of whom are women.
Removing the work test for people aged 67 to 75 and reducing the eligibility age for the downsizer contribution
From 1 July 2022, the work test for personal (non-concessional) and salary sacrifice contributions to super for those aged 67 to 75 will be removed. Existing annual concessional and non-concessional caps will continue to apply, although the change will allow people under age 75 to use the non-concessional bring-forward rule (which currently ceases at age 67).
Also from 1 July 2022, retirees who downsize their family home will be able to contribute $300,000 to superannuation ($600,000 for couples) at age 60 (currently age 65). Other existing requirements will continue to apply.
Improving visibility of super assets in family law proceedings
From 1 April 2022, the Australian Taxation Office can share information with the Courts on superannuation assets held by parties during family law disputes. The government notes this will help deliver fairer and more equitable outcomes for women going through separation proceedings by reducing the scope for former partners to under disclose their assets.
Cost of living relief economic support payment for age pension recipients
The government announced it would provide $1.5 billion in 2021-22 to provide a $250 economic support payment to help eligible recipients with higher cost of living pressures. The payment would be made in April 2022 to eligible recipients of payments including the age pension and to concession card holders including Pensioner Concession Card (PCC) holders.
The payments would be exempt from tax and wouldn’t count as income support for the purposes of any income support payment. A person will only be able to receive one economic support payment, even if they are eligible under two or more of the categories, and the payment will only be available to Australian residents.
This document has been prepared and issued by Australian Retirement Trust Pty Ltd ABN 88 010 720 840, AFSL No. 228975, the Trustee and issuer of the Australian Retirement Trust ABN 60 905 115 063. It contains general information only. Any advice does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of any advice having regard to your personal objectives, financial situation and needs before acting on that advice.