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Federal Government Budget Update

The Federal Government has announced a number of proposals as part of their recent budget update.

Co-contribution halved with effect from 1 July 2012

The co-contribution is proposed to reduce to 50 cents for every $1 (down from $1 for every $1) with the maximum co-contribution halved to $500 (from $1,000). The lower income threshold remains at $31,920 and the upper threshold reduces to $46,920 (from $61,920).

25% reduction in minimum for account based pensions for 2012/13 with effect from 1 July 2012
The minimum pension payment will be able to be reduced by 25% of the standard rate for next financial year to enable members to preserve capital. After that it is proposed to return the minimum pension payment amount to the standard rate.

Baby bonus reduced with effect from 1 September 2012
The baby bonus will reduce to $5,000 per child and indexation of this amount will be frozen for three years from 1 July 2012.

Removal of any maximum age limit for Super Guarantee (SG) contributions with effect from 1 July 2013
The SG age limit of 70 is proposed to be removed entirely instead of being increased to 75 from 1 July 2013 to provide an enhanced incentive for older workers to remain in the workforce.