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Low-income workers catch a superannuation break

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By John Beveridge - 
Low-income workers superannuation 2022 Australia retirement income

Australians earning less than $450 a month before tax will now be paid superannuation.

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Prime Minister Scott Morrison can’t take a trick in Parliament at the moment.

The Senate has simply tossed out his regulatory attack on proxy advisors and five Liberals crossed the floor to ensure the Religious Discrimination Bill went nowhere.

However, amid all of the sound and fury accompanying these dramatic events, one really good piece of legislation made it through a rushed session of Parliament.

Starting on 1 July, about 300,000 lower income workers will finally be paid superannuation after legislation abolishing minimum salary thresholds for receiving superannuation passed Parliament.

That means that those Australians earning less than $450 a month before tax will now be paid superannuation.

About 225,000 of these workers will be women – many part-time and many for the first time having some money put away for their retirement.

Even small super balances can be crucial in boosting retirement incomes

While these amounts will be modest, these super guarantee payments could prove crucial for many as a way of bolstering the pension when retired.

The median or “middle” annual income for these workers is just $12,000 a year so one of the most important things for them is to have a super account with very low fees that is kind to small balances – most likely a default fund.

Superannuation minister Jane Hume said abolishing the threshold would remove an outdated structural feature of the system and improve equity.

More reform needed to overcome the female super gap

However, Industry Super said much more needed to be done to address retirement inequality, with the payment of super on Commonwealth parental leave another important step to ensure fewer women faced financial insecurity at retirement.

Getting rid of the minimum salary thresholds for super was not the only change achieved through legislation, with people aged between 67 and 75 now allowed to make non-concessional superannuation contributions without having to meet the work test.

That will be particularly welcomed by older Australians who want to boost their super balance and centralise their savings without having to get a job.

Larger home deposits can also be released for first home buyers

The limit of voluntary super contributions to be released as part of the first home super saver scheme will also increase from $30,000 to $50,000, helping first home buyers save for their deposit faster.

“Through these measures, the Morrison government is ensuring the superannuation system works harder for all Australians by strengthening protections around the retirement savings of millions of Australians,” Senator Hume said.