Boosting retirement savings

Government superannuation co-contribution

The Government will increase the incentive for low to middle income Australians to make additional voluntary savings through the superannuation system. This measure will cost $2.1 billion over the forward estimates.

From 2004-05, the maximum Government co-contribution will be increased from $1,000 to $1,500, to match a $1,000 personal contribution. The maximum Government co‑contribution of $1,500 will be available to all people making personal contributions on incomes up to $28,000. The income threshold was previously $27,500. Above this amount, the maximum co‑contribution will reduce by 5 cents for each dollar of income to phase out completely at $58,000, up from $40,000.

Superannuation surcharge

The Government will further reduce the superannuation surcharge rate, leading to a maximum rate of 7.5 per cent for 2006-07 and following years.

This measure will cost $610 million over the forward estimates period and will boost retirement savings.

Flexibility and choice

With the ageing of the population, the retirement income system needs to be more flexible and adaptable to the changing workplace arrangements and provide more choices. The Government is reducing restrictions on who may contribute to superannuation and improving options for those in the transition to retirement and those in retirement.