As we step into the new financial year, a series of significant superannuation changes took effect on
July 1st. These updates are designed to give your retirement savings a boost, but it’s important to
understand how they might impact you.
Super Guarantee Increase
The Super Guarantee (SG) rate is on the rise. From July 1st, employers will be required to increase
their minimum super contributions from 11% to 11.5% of your salary. This might sound like a small
change, but over time, this extra 0.5% can significantly enhance your retirement nest egg.
Government’s Super Co-Contribution Scheme
Here’s a potential game-changer for low to middle-income earners. From July 1st, the income
thresholds for the government’s super co-contribution scheme are increasing. If you earn less than
$45,400 or up to $60,400 in the 2024-25 financial year and make an after-tax contribution to your
super, you could get up to $500 per year from the government. It's essentially free money to bolster
your retirement savings!
New Contribution Caps
The caps on how much you can contribute are changing:
- Concessional (Before-Tax) Contributions: The limit is rising from $27,500 to $30,000 per
financial year. Contributions are generally taxed at 15%, which could be lower than your
marginal tax rate, helping you save on taxes while boosting your super.
- Non-Concessional (After-Tax) Contributions: The cap is increasing from $110,000 to
$120,000 per financial year. If you can afford to, you can now contribute more of your after-
tax income to your super. Remember, your total super balance may affect your eligibility.
Bring-Forward Rule: With the higher non-concessional limit, the bring-forward rule allows you to
make up to three years’ worth of contributions in one financial year. This means you could
potentially contribute up to $360,000 to your super. Check your eligibility on the ATO website.
Preservation Age is Now 60
Another crucial change is that the preservation age, the age at which you can access your super, is
now 60 for everyone. This adjustment means the previous low-rate cap rule allowing people aged
55-60 to withdraw up to $235,000 at a lower tax rate is no longer available.
