unpacking the 2022 Budget

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Budget 2022/23 wrap-up

 

This year’s Federal Budget focused on measures designed to ease the cost of living.

The only change to super announced was to extend the temporary reduction in income stream minimum drawdown rates. This means income stream recipients can choose to preserve more capital while investment markets continue reacting to the pandemic and geopolitical instability.

To ease cost of living pressures, over 10 million Australians are set to benefit from an additional one-off $420 cost of living tax offset for the 2021-22 year. The government has also promised a one-off tax-exempt payment of $250 to eligible people including pensioners, welfare recipients, veterans and concession card holders. In addition to this measure, the fuel excise (the money the government takes every time you fill up your car) has been immediately halved to 22c/litre. 

 

Climate change

The government’s spend on some of its key climate change agencies is set to decrease by 35 per cent over the next 4 years.

Budget documents show that funding will go from $2 billion a year in 2021-22 to $1.3 billion by 2025-26.

At HESTA we consider climate change to be one of the most significant threats to our economies, societies and environment. 

Find out how we consider climate change risks in all of our investment decision making.

 

What we’d have liked to see in the Budget

It was disappointing this year’s Federal Budget contained no measures to make our super system fairer for women. Women retire with almost a third less super than their male counterparts. Women, and those who raise children, continue to pay an unfair financial penalty through inadequate super balances, leaving too many vulnerable to poverty as they age.

We’re pushing for Australia’s next government to deliver reforms to super, including in their first term:

  • paying super on Commonwealth paid parental leave, and
  • introducing a superannuation carer credit for new parents to help get their super balances back on track following unpaid parental leave.

 

 

Other super changes you'll see this year

 

Streamlining super splitting procedures

Following a successful pilot, we’re proud to be the first Australian super fund to adopt the Simpler Super Splitting initiative. In what can be a really stressful time for members, this initiative uses a simple, plain language form for court orders that can be used across the super and legal sectors and by the courts.

We urge all other super funds to adopt this new universal, streamlined process to make the splitting of superannuation assets easier, faster and fairer.

 

SG increase

Perhaps the most important change to take place from 1 July 2022 is an increase to the employer Superannuation Guarantee contribution you receive. From 1 July 2022, your employer must pay 10.5% of your ordinary earnings into your super fund (up from 10%).

Other changes announced in last year’s Federal Budget will also begin on 1 July 2022. These are:
 

  • the eligibility age for the super downsizer scheme will be lowered to 60 from 65, and
  • the super contribution work test for those aged 67 to 74 will be removed, enabling older Australians to continue building their super savings*.
  • you’ll no longer have to earn at least $450 for the month to receive employer (SG) super contributions.


Removing the $450 threshold helps make our super system fairer for women and those on lower wages. It’s a great result for HESTA members, and indeed for all Australians who work multiple, part-time or casual roles.


* The work test will continue to apply for personal contributions that the person wishes to claim as a tax deduction.

 

 

need help?

No matter what changes around us, HESTA is always here for you. Our specialist team is ready to help you work through anything that might affect your super, from economic shifts to market movements. As a HESTA member, you can get one-on-one advice about your account at no extra cost.

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