QSuper applauds passing of new super legislation

QSuper members of all ages may benefit from new superannuation legislation that passed through Parliament on 10 February 2022. These changes will take effect from 1 July 2022.

QSuper Chair Don Luke said the Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021 could add tens of thousands of dollars to the retirement balances of members as well as assist low income members to build a superannuation account.

How these initiatives may impact you

Lower age threshold for super downsizer scheme from 65 to 60 years:

Extension of the scheme to younger members may help provide more flexibility in planning your retirement.

The downsizer contribution, which was introduced by the Australian Government three years ago, has become a part of the retirement income mix and allows retirees to move to smaller accommodation as their family size drops and to turn the capital tied up in their home to retirement income.

QSuper members downsizing their family homes contributed more than $160 million to their super accounts in 2020-21.

More than 730 QSuper members made downsizer contributions, with the average contribution around $219,000. This was up from 520 members using the scheme in 2019-20. The average age of members making downsizer contributions in 2020-21 was 73.

Based on QSuper modelling, a 60-year-old adding $300,000 to their super balance would be able to draw an additional tax-free income of almost $20,000 per year from age 60 until age 88.¹

Removing the $450 monthly income threshold:

QSuper data shows that women, on average, have a retirement balance 27% less than men. It shows women aged 60-64 are retiring with, on average, a balance of approximately $297,000 while men are retiring with almost $409,000.

Women have higher rates of casual and part-time work, sometimes working for more than one employer, which has added to the imbalance due to the income threshold.

This legislation means that low-income earners, many of whom are women, will now receive super contributions on all their income.

The removal of the $450 income threshold may also mean tens of thousands more in retirement savings for women who reduce their working hours to care for family members.

QSuper modelling shows that with the threshold removed, a 40-year-old who earns $449 per calendar month could have almost $30,000 more in super by age 67.²

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1. These figures are illustrative only and were calculated using the MoneySmart calculator (accessed 1 December 2021). The calculation does not take into account Age Pension entitlements. It assumes a starting balance of $200,000, with interest of 7.5% which compounds monthly, earnings are reinvested and fully credited at the end of each month, and provides an estimate of the future value of savings, which could vary significantly over time if any change is made to these assumptions. Results are shown in today's dollars, which means they are adjusted for inflation of 2.5%.
2. These figures are illustrative only and were calculated using the MoneySmart calculator (accessed 30 November 2021). The calculation assumes 10% SG contributions on a gross monthly income of $449 until retirement at age 67, with a starting balance of $50,000. Interest compounds monthly, earnings are reinvested and fully credited at the end of each month, and provides an estimate of the future value of savings, which could vary significantly over time if any change is made to these assumptions. The interest rate assumed is 7.5% p.a. and is net of fees and taxes. Results are shown in today's dollars, which means they are adjusted for inflation of 2.5%.