Over the years, superannuation regulations have changed significantly since its inception in 1992 with a 3% compulsory super levy. The rules surrounding retirement savings are constantly being tinkered with, and there is currently a proposal to cap the amount that can be kept in superannuation accounts. However, changes in regulations often create new opportunities to maximise your retirement income.
Firstly, it's important to be aware of the interplay between the super guarantee amounts paid by your employer and the voluntary concessional contributions you make. The super guarantee increased from 10% to 10.5% on 1 July 2022 and is scheduled to keep rising by 0.5% each year until it reaches 12%. Currently, the annual contributions cap is $27,500, so it's important to stay below the cap to avoid any unpleasant tax issues. This is particularly important for individuals who are already contributing near the cap, and the super guarantee increase might reduce the available annual contributions cap.
Secondly, it's worth looking at the availability of the Commonwealth Seniors Health Card (CSHC), which offers significant savings on healthcare costs for those over the age pension age of 67. The income threshold above which access to the card was denied has been dramatically increased, adding eligibility to an expected extra 50,000 people. Under the old rules, singles and couples could not get a card if they earned more than $57,761 and $92,416, respectively, while the new limits are $90,000 for singles and $144,000 for couples. The CSHC also provides state-based energy and transport rebates and discounts on state government fees and charges.
Thirdly, low-income workers can now access more super. The $450 minimum monthly earnings threshold for superannuation guarantee payments has been removed. This change benefits low-income, part-time workers and will encourage more workers, particularly women, into the superannuation system.
Fourthly, older workers who have not enjoyed the super system for a large chunk of their working lives now have new opportunities to top up their super. It used to be that you had to prove that you were working to put money in super, but now that test has been removed for anyone under the age of 75. However, there is a $110,000 annual cap for these types of contributions, and penalties apply for breaching the limit.
Finally, downsizing your home could offer you an opportunity to boost your retirement income. If you're over 60 and have owned your home for at least 10 years, you can make a downsizer contribution of up to $300,000 to your super from the proceeds of selling your home. The contribution won't count towards your contributions cap, and it's tax-free.
In conclusion, there are several recent changes to superannuation regulations in Australia that offer new opportunities to boost your retirement income. While these changes are not recommendations, they may be worth investigating further to see if they're suitable for your individual circumstances. Always consult a financial advisor, lawyer, or accountant to ensure they're right for you.
