The Federal Government has announced that it will raise the superannuation guarantee from 9.25% to 9.5% on 1 July of this year and freeze it at that level until 30 June 2018. Despite this, the government still intends to increase the guarantee to 12% by 2023 through 0.5% increases each year from 1 July 2018.
The government hopes that this change will provide certainty for business as to the amount under the guarantee. Up until now there has been confusion over whether the current rate of 9.25% would be payable, as previously announced, or the legislated 9.5%. The move coincides with the proposed amendments to the age pension: the eligibility age will rise to 70 and it will be indexed against CPI instead of wages. These changes are in line with the stated intention of the Abbott government to encourage self-funded retirement.
Whilst other elements of the Federal Government's annual budget (one of the most austere budgets in the past 20 years) may not pass through both Houses of Parliament, it is expected that this measure will pass.