Low income super savers lose $35,000

03/01/2012

New Federal Government co-contribution superannuation rules mean the nation's poorest workers will lose at least $32,000 by the time they retire. Low-income workers were promised a retirement nest-egg boost from next year through tax cuts, adding about $35,000 to super funds. But projections by financial advice veteran Noel Whittaker show that could be wiped out by changes in co-contribution rules from July 1. A 44-year-old part-time worker earning $25,000 a year who made an annual personal contribution of $1000 into a super fund could lose as much as $32,000 by retirement age, according to the forecast. "All these changes make it less easy for people to provide for their own retirement," Mr Whittaker, of financial firm Whittaker Macnaught, said.

From July, voluntary super fund contributions will not be matched dollar-for-dollar by the Federal Government. The Government will instead pay 50c for every dollar parked in super by workers and halve the maximum contribution entitlement to $500 a year. Thousands will become ineligible for the payments after the income test cut-off was slashed from $61,920 a year to $46,920 a year. Soon-to-be retirees would also feel the pain of an extended freeze on the cap limiting the amount of cash they can throw into super to $25,000 a year. Queensland Council of Social Service president Karyn Walsh feared the changes made it harder than ever for workers to understand their super. SuperRatings managing director Jeff Bresnahan said it had gone too far in undoing overly generous Howard Government-era incentives.

Source: Sunday Mail