The Coalition’s superannuation plans will hit low-paid and middle-income earners the hardest.
Nurses’ hopes of building enough superannuation for a comfortable retirement suffered a blow with Tony Abbott’s announcement of the Coalition’s superannuation policy.
Mr Abbott said a Liberal-National government would “defer” measures to raise the Superannuation Guarantee (SG) from 9% to 12% and abolish the Low Income Superannuation Contribution (LISC).
Labor’s Superannuation Guarantee increase and LISC represented significant wins for industry super fund members, including nurses, when passed by parliament last year.
Under the current law the SG rate will increase gradually with initial increments of 0.25 percentage points on 1 July 2013 and on 1 July 2014. Further increments of 0.5 percentage points will apply annually up to 2019-20, when the SG rate will be set at 12%.
With 12% guaranteed contributions, a 30-year-old, earning average full-time wages (about $1450 per week), would have an extra $108,000 in retirement savings. However, not if the Coalition is elected at the September 2013 election.
While the increase to 9.25% for the 2013/2014 year will remain in place, it will not increase any further until 2016 at the earliest. NSWNMA General Secretary Brett Holmes said Mr Abbott’s decision to abolish the LISC would hurt more than 3.6 million Australians earning less than $37,000 per year.
“It is highly unfair for Mr Abbott to target this group for budget savings,” Brett said. “The LISC provides a tax rebate of up to $500 for those wage earners, meaning they effectively pay no tax on their concessional super contributions.
“The LISC was brought in to correct an injustice for low income earners, who used to pay as much, if not more, tax on their super contributions than on their wage income.”
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