An extra $108,00 for Tom! Super

A thirty year old salesman like Tom Smith – who now earns $70,000 a year – can expect an extra $108,00 in his superannuation pot when he retires, the Federal government says.

The Federal Superannuation Minister, Bill Shorten, says that will flow from changes to the law, that he has just proposed in Federal Parliament.

The industry welcomed his announcement – and urged Federal members and Senators to vote for the planned changes.

Mr Shorten, too, was confident.

“These changes will start on 1 July 2013,” he said.

The most important are a gradual increase in the compulsory superannuation guarantee levy, from its present 9 per cent to 12 per cent and the removal of a current cap on contributions.

The levy would be increased gradually, over seven years.

“Australians should not have to work hard and retire poor,” Mr Shorten said.

“Nine per cent super is simply not enough.”

The Association of Superannuation Funds of Australia (ASFA) says the plan to increase the levy “is an historic moment for the country.”

It said the government’s plan would secure increased retirement savings for most Australian workers.

The plan to move gradually to the higher levy is popular.

ASFA says a recent survey showed that it had 67 per cent support.

Mr Shorten was also upbeat.

“In the biggest change to superannuation in 20 years,” he said.

“Around 8.4 million Australians will have their superannuation savings boosted as a result of the superannuation guarantee rate legislation introduced into the Parliament today,” he added.

However his plan is not absolutely certain to pass parliament.

The move is to be funded in part by the Federal government’s new mineral resource rent tax.

A bill, to introduce that tax, was also introduced into Federal parliament Wednesday.

However, Julia Gillard’s minority Labor government did not appear, then, to have the numbers it would need, to have that tax made law.

Mr Shorten also said: “I have decided there will be no age limit for superannuation guarantee contributions.”

At present, workers can only receive superannuation guarantee levy contributions to their super until they turn 70.

This cap is to be abolished.

The Age Discrimination Commissioner, Susan Ryan, hailed the decision.

Ms Ryan, a former Labor Senator, said: “This amendment sends a strong and positive message to older employees.”