Article
$450/month Superannuation Threshold Abolished
Media release – Super Consumers Australia, 10 February 2022
Super Consumers Australia welcomes the move to pay super to 300,000 more Australians
Super Consumers Australia welcomes the passage of legislation through the Senate today, which will abolish the $450/month threshold and mean more Australians will be paid super for their work.
“Scrapping this dinosaur rule is a step towards making super fairer,” says Xavier O’Halloran, Director at Super Consumers Australia.
The Retirement Income Review had confirmed axing this rule would lead to better retirement outcomes for women, low-income earners and people doing part-time work in particular.
Around 300,000 Australians, including about 200,000 women and 100,000 men, were missing out on super because of this rule. (With the legislation now passed through both houses of parliament, this situation will end on 1 July 2022)
O’Halloran says the rule was a relic of a previous era before digital payrolls, and any justification for it remaining had long passed.
“It’s an important change that will make the superannuation system more equitable,” O’Halloran says.
“However, there is still work to do to make sure the retirement system is fair for all Australians. We know that carers and those who take parental leave are missing out on super, impacting their retirement.
“We need to keep working to ensure that taking time out of the workforce to care for loved ones doesn’t set you back once you’ve finished your working life.”
Parliament delivers much needed super boost to women on lower incomes
The Parliament has sealed legislation that would give a super boost to 300,000 Australians on lower incomes, two thirds of which getting more super payments are women.
Long overdue legislation to abolish the outdated $450 threshold, when super is not paid if a worker earns less than that figure a month, was passed yesterday removing a system relic that denied part-time and casual workers retirement savings.
Industry funds had long fought to remove this antiquated law and the government, and the Parliament should be congratulated for passing the Enhancing Superannuation Outcomes for Australians Bill, which contained the measure to remove the $450 threshold.
The median super balances of those impacted by the $450 threshold is just $12,000 – securing them retirement contributions – many for the first time – will be vital for their future financial security.
About 60% – roughly 200,000 – of those impacted by the $450 threshold are women and this measure is a necessary step towards bridging the gender super gap, which sees women retire with about a third less super than men.
But it is just a first step towards addressing gender equity in retirement.
There are a suite of measures the major parties must commit to – starting with paying super on Commonwealth Parental Leave Pay and sticking with the super guarantee rise to 12% – to seriously address the gender super gap.
Industry Super Australia also welcomes the passing of the Retirement Income Covenant. The covenant will help super funds assist their members in the retirement phase as well as the accumulation.
Comments attributable to Industry Super Australia Advocacy Director Georgia Brumby:
“Abolishing the $450 threshold removes a structural inequity that discriminated against those on lower incomes and disproportionately impacted women – it is a welcome first step towards addressing retirement inequality.”
“The government and Parliament should be congratulated for delivering this overdue reform, but further measures – like paying super on Commonwealth parental leave – now need to be taken to ensure the next generation of women do not face financial insecurity at retirement.”
“The Retirement Income Covenant is a welcome measure that will help funds assist their members in the retirement phase.”