As part of the 2021 Federal Budget, The Australian Government has announced that businesses part-time and casual employees will now have to pay for their superannuation as the government discontinues the $450 minimum income threshold.
Under the current rates, employees earning under $450 a month are not required to be paid the superannuation guarantee by their employer.
The proposed changes will result in seeing 300,000 workers across Australia receiving additional SG payments each month. It is estimated that 63 percent of the 300,000 workers are women.
Super funds claim that the average 30-year-old woman just scored $85,000 over the course of a lifetime as a result of budget changes to retirement income rules.
The decision made by the government to stick to the plan to increase compulsory super contributions by employers to 12 percent and force bosses to pay super even if you’re working part-time.
The Australian Government expects the measure to be implemented on the 1st July 2022 and is estimated to decrease the underlying cash balance by $31.5 million over the forward estimates period.
The Retirement Income Review found that 63% of those earning less than $450 a month are women. It also found that the current median gender gap in superannuation balances at retirement is 22%. This means that over 200,000 women will benefit from the Superannuation Guarantee Threshold being scrapped.
“This measure will improve equity in the superannuation system by expanding the superannuation guarantee coverage for cohorts with lower incomes,” said the government in its budget papers.
Industry bodies have lobbied for the removal of the threshold for several years now, including the Australian Institute of Superannuation Trustees, Women in Super and Association of Superannuation Funds of Australia.
Abolishing the requirement for workers to earn $450 a month with a single employer would also not cost employers much adding only a couple of hundred dollars on average to their costs for every employee.
The discontinuation of the $450 threshold will help women build their superannuation savings throughout different stages of their career, especially if they are working multiple jobs.
According to Budget Paper No 2, it will cost taxpayers close to $4.8 million in 2022-23 rising to $13.8 million in 2024.
The federal government will also pause the early release of superannuation to victims of family and domestic violence.
These changes coincide with the government moving to increase the maximum amount that can be released under the First Home Super Saver Scheme from $300,000 to $50,000.
The expansion of the federal government’s New Home Guarantee, which will run for a second year and benefit a further 10,000 Australians over the duration of the 2021–22 financial year. The scheme encourages home buyers looking to build or buy a newly built home with a decreased deposit of 5 percent.
The New Home Guarantee was first introduced as part of the 2017–18 budget, the scheme allows taxpayers to make voluntary contributions of up to $50,000 which including before-tax contributions, like salary sacrifice and after-tax contributions can be withdrawn at a later date to buy their first home.