Federal Budget 2022: What it means for super

The budget announcement by Treasurer Josh Frydenberg on Tuesday 29 March 2022, included a range of measures to reduce the cost of living for Australians, with no significant change to superannuation.

However, there are a number of changes from previous budgets that will come into effect on 1 July 2022. 

Additionally, it was announced that the temporary reduction in superannuation minimum drawdown rates will again be extended.

What’s changing on 1 July 2022?

Here are the key changes and what they could mean for you.

Superannuation guarantee to increase to 10.5%

The Superannuation Guarantee (also known as SG or Employer Contributions) is the minimum super contribution paid into your super by your employer. It’s currently set at 10% of your gross superannuation salary and is set to increase progressively until 1 July 2025.

On 1 July 2022 the SG increases from 10% to 10.5%.

Here are the currently legislated future changes to the SG rate:

Financial year	Superannuation Guarantee Rate
2022-23	10.5%
2023-24	11%
2024-25	11.5%
2025-26	12%
2026-27	12%
2027-28	12%

 

Source: Australian Taxation Office, Super guarantee percentages, March 2022.

What does this mean for Super SA members?

SA Government employees who are members of Triple S and Super SA Select will see their employer contributions increase to 10.5% from 1 July 2022. Members of the defined benefit schemes will see no change to their benefits, as the benefits from these schemes are above the minimum employer rate. 

Removal of the work test for those aged 67 to 74

The federal government is removing the current ‘work test’ requirement for older Australians. From 1 July 2022, anyone aged 67 to 74 will be able to make voluntary super contributions without having to satisfy a ‘work test’. The work test requires Australians in this age group to be employed for at least 40 hours in 30 consecutive days – in the year they make voluntary contributions to super.

What does this mean for Super SA members?

Members with Flexible Rollover Product (FRP) or Super SA Select accounts will no longer have to satisfy a work test to make voluntary super contributions from 1 July. No changes will apply to Triple S. Members can continue to make voluntary contributions while they remain employed in the South Australian public sector. The work test will still need to be met by individuals aged 67 to 74 who wish to claim a tax deduction on any personal super contributions they make (Super SA Select and Flexible Rollover Product only).

Lower age threshold for downsizers

Thanks to new legislation passed earlier this year, the eligible age for downsizer contributions will be lowered from age 65 to 60 on 1 July 2022.

What does this mean for Super SA members?

Members who sell their primary residence may be able to make a one-off after-tax contribution of up to $300,000 to their superannuation from age 60 instead of 65. Downsizer contributions do not count towards the concessional and non-concessional contributions caps. Other eligibility rules will remain unchanged.

Higher withdrawal limit for the First Home Super Saver Scheme

The First Home Super Saver Scheme is designed to boost the deposit savings of first home buyers. The Scheme allows people to make voluntary contributions into their eligible super fund to save for their first home. Right now, the voluntary contribution limit is capped at $15,000 a year and $30,000 in total. On 1 July 2022, the maximum amount of voluntary contributions first home buyers can take from the First Home Super Saver Scheme will increase from $30,000 to $50,000.

What does this mean for Super SA members?

This change allows you to build even more of your first home deposit within your Flexible Rollover Product or Super SA Select accounts. The Scheme is not available to Triple S members.  

Extension of income stream minimum drawdowns

The Federal Government has again extended the income stream minimum drawdown rates for the 2022-23 financial year.

What does this mean for Super SA members?

Members of Super SA’s Income Stream will be able to continue to take advantage of the 50% temporary drawdown reduction until 30 June 2023. There’s nothing you need to do unless you wish to change your nominated amount. You can do this via the Member Portal. Once you’re logged in, simply update your payment details via the Income Stream Payment Details section. 

Removal of $450 monthly income threshold for super contributions

Earlier this year, the federal government passed legislation to remove the $450-a-month income threshold for compulsory employer super contributions from 1 July 2022. This means that people working part-time or on an ad-hoc basis – the majority of whom are women – will be able to start receiving super contributions from their employers. It should be noted that the SA Government does not generally apply this threshold to public sector employees, meaning that public sector employees on any income receive super contributions.