When it comes to Australian Federal Budgets, superannuation usually gets a mention or two. After all, it plays a pretty crucial part in securing Australians retirement. There’s one update for those currently or soon to be receiving the pension from the 2022-23 Budget. The bigger changes that will impact more Australians are from the 2021-22 Budget and apply from 1 July 2022. Read on for the details.

Changes to help maximise your super

In great news for most Australians there were three key changes announced in the 2021-22 Budget –  they’re effective from 1 July 2022. Here’s how they could help make a big difference to your super outcomes.

1. First home buyers can access up to $50,000 from super

The First Home Super Saver Scheme was designed to:

• Help younger Australians use their super to help save for their first home.
• Allow Australians to save within their super, and when ready to purchase, withdraw those funds, along with the interest earned to help pay for the purchase of their first home.
• Currently individuals can access up to $30,000 via the First Home Super Saver Scheme (FHSSS) to fund the purchase of their first home.

Legislation has been passed to increase this amount from $30,000 to $50,000, effective 1 July 2022.

Learn more about the First Home Super Saver Scheme and eligibility via the ATO website.

2. Employer Superannuation Guarantee Contribution rate boosted from 10% to 10.5%

To help Australians build more super for their retirement, the increase of Super Guarantee (SG) contributions your employer(s) make into your super fund will increase from 10% to 10.5% from 1 July 2022. The 0.5% increase is managed by individual employers and may be calculated as per your employment contract.

Increasing the SG rate has been on the agenda for a long time, with legislation to increase the rate to 12% by 1 July 2025 already passed. The economic downturn caused by COVID-19 fuelled speculation that the original increase from 9.5% to 10% would be delayed, however the good news is it’s happening. Here’s the current schedule as to when each increase will happen to reach 12% contributions.

3. Increased flexibility for older Australians

Changes made to the downsizer contribution and the work test will be coming into effect on 1 July 2022, providing older Australians with more flexibility and control over their retirement savings.

In last year’s Federal Budget the Government announced that they intended to lower the minimum age an individual could make a downsizer contribution from 65 to 60. The scheme allows eligible people to add up to $300,000, or $600,000 per couple, to their super account, from the proceeds of selling their home, or ‘downsizing’. The program will help reduce pressure on housing affordability, by freeing up housing stock for people trying to enter the housing market.

Reduced pension minimum drawdown rates to be extended

As part of the 2022-23 Federal Budget, the Government has announced their intention to extend the reduced pension minimum withdrawal (‘drawdown’) rates to 1 July 2023. This relief, implemented in response to COVID-19, was expected to end on 30 June 2022.

The temporary drawdown rates reduce the minimum pension payment requirements for allocated pensions by 50%. The minimum amount a customer must withdraw from their allocated pension account is determined by their age and balance as at 1 July each financial year. See the table below for the standard and temporary drawdown rates. Although announced as part of the 2022-23 Federal Budget it is important to note that the extension of temporary drawdown rates until 1 July 2023 has not yet been passed into law.

Speak to an expert

Virgin Money Super offers Simple Super Advice from qualified financial advisers, at no additional cost to you. Our advisers are here to help you feel confident about your super and make the big decisions that are right for you.

If you have any questions along the way, visit Virgin Money Super or call on 1300 652 770 (Monday to Friday from 8am to 6pm AEST) to find out how you can save for tomorrow and be rewarded today.

Important information

This information is of general nature only, and does not take into account your personal financial situation, needs or objectives. As we don't know your financial needs we can't advise if Virgin Money Super will suit you. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide and Financial Services Guide before making a decision

It is very important to note that superannuation is generally a long term investment. Past investment performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a fund.

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