The Government has announced plans to scrap the age limit on superannuation contributions, amid concerns of a skills shortage, workforce participation levels and how Australia will fund and replace baby boomers as they exit the workforce.
Assistant Treasurer Bill Shorten says the proposal means that 18,000 people over 75 years of ago who are still working will be paid compulsory super for the first time. Under the current system, an employer is not required to pay super contribution guarantees for workers 70 and over. The plan will take effect July 2013.
It comes as the Government introduces legislation to boost super contribution levels to 12% from 9%, and announces that people earning less than $37,000 will no longer need to pay a 15% tax on super. The second change covers almost one-third of the workforce, or 3.6 million workers.
Michael Davison, senior policy adviser for superannuation at CPA Australia, welcomes the decision to scrap the age limit on superannuation contributions but says it could further, by extending to salary sacrifice, for example.
Davison says for many people retiring at 65, there simply isn’t enough money to survive the next 20 or 30 years, particularly after the GFC battered their savings.
“The reality is most people are underfunded,” Davison says. “And particularly for small businesspeople, who have lean years when they don’t contribute much and then good years.”
The move has also been welcomed by Australia’s first-ever Age Discrimination Susan Ryan, who says it sends a “strong and positive message to older employees and to their employers that age should not be a barrier to employment.”
“This decision means that in respect of superannuation, older workers be they over 75 or over 80 will have the same rights as all other employees,” Ryan says.
“They will have more super to retire on, the Government will have a lower age pension bill, and productivity will grow as older workers are encouraged to continue in their jobs.”
The Team at Reinvent Your Career would like to thank Smart Company where this article first appeared