Although the government is lauding the significantly-promised mining tax repeal as one thing which may save the Price range around $ 50 billion over the subsequent decade (such as a saving of approximately $ 2.5 billion over the forward estimates by re-phasing the Superannuation Assure boost), CANSTAR has calculated that it will hit the retirement nest egg of the typical 30 year-old worker by around $ 20 – $ 40,000 depending on their current income level.
As background, the Gillard federal government announced, in September 2010, that the rate of superannuation assure (SG) payable by employers would boost from its then-level of 9% to a rate of 12%, escalating in increments between 1 July 2013 and 1 July 2019.
In the May 2014 Federal Spending budget, the present federal government had currently delayed the improve in superannuation assure (SG) payments. As component of the mining tax repeal it has legislated an additional 3-year freeze. Based on that, workers will not acquire the complete 12% SG rate till 1 July 2025.
So how will that additional 3 year “pause” have an effect on retirement nest eggs?
The table below shows the projected impact for a 30 year-old worker organizing to retire at age 65, and assumes a salary boost of 3% per annum.
Existing Earnings | Annual return net of charges/tax | Retirement balance pre-SG freeze (future dollars) | Retirement balance post-SG freeze (future dollars) | Distinction |
$ 30,000 | 7% | $ 1,25,000 | $ 1,086,000 | $ 14,000 |
$ 40,000 | 7% | $ 1,289,000 | $ 1,270,000 | $ 19,000 |
$ 50,000 | 7% | $ 1,478,000 | $ 1,454,000 | $ 24,000 |
$ 60,000 | 7% | $ 1,667,000 | $ 1,638,000 | $ 29,000 |
$ 70,000 | 7% | $ 1,856,000 | $ 1,822,000 | $ 34,000 |
$ 80,000 | 7% | $ 2,045,000 | $ 2,006,000 | $ 39,000 |
Source: CANSTAR. Assumes salary indexation of 3% per annum and retirement at age 65.
While the SG freeze will undoubtedly impact the retirement nest egg of workers, you ought to nevertheless guarantee that you’re as super-savvy as you can be. Right here are some factors you must look for in a fantastic-value super fund.
What will the mining tax repeal cost your retirement nest egg?
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