10 February 2022
Removing the SG $450 threshold and retirement income covenant will improve super outcomes
The Association of Superannuation Funds of Australia (ASFA) welcomes the passage of bills that remove the $450-a-month threshold before an employee’s salary or wages count towards the Superannuation Guarantee (SG) and introduce a retirement income covenant.
“The removal of the $450 a month SG threshold is an important step towards improving the retirement savings for low-income earners, particularly women and younger Australians who work part-time, whose superannuation is adversely affected by this threshold,” said ASFA CEO, Dr Martin Fahy.
“ASFA consistently has advocated for the removal of the $450 threshold to give low income and casual employees an entitlement to super to get better retirement outcome,” said Dr Fahy.
This measure will benefit around 300,000 people, of whom approximately 63 per cent are female. Removal of the $450 threshold improves the coverage of super and enhances equity across the super system.
ASFA also welcomes the passage of a bill that introduces a retirement income covenant, with effect from 1 July 2022.
“The legislating of a retirement income covenant is a significant step in encouraging the further development of the retirement phase of superannuation and should assist members to be able to make informed decisions in retirement,” said Dr Fahy.
“With a maturing super system, we expect to see a greater proportion of retirees relying less on the Age Pension and more on their superannuation. Given this, it is important that members are assisted to make informed decisions about how to use their super savings to increase their standard of living in retirement,” concluded Dr Fahy.
For further information, please contact:
Brian Karlovsky, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system, so all Australians can enjoy a comfortable and dignified retirement.