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Date of article: May 2006
Last updated: N/A

Simplified superannuation - how does it affect you?

What will these changes mean for you? Some have already taken effect. Others will be effective from 1 July 2007.

The treasurer announced in Budget 2006 the proposed plan to change the superannuation system in Australia. He announced that it would be 'the most significant change to Australia's superannuation system in decades'.

The proposed plan will remove the complexity surrounding superannuation arrangements and make it easier to understand.

The key changes of the proposed plan are:

  • Super benefits received by people aged 60 and over will be tax free
  • Reasonable Benefit Limits will be abolished
  • Employer Eligible Termination Payments must be taken as cash
  • Limits on concessional contributions (deductible contributions) will be simplified
  • Limits on voluntary contributions (undeducted contributions)
  • Greater flexibility as to how and when to draw down super - no more compulsory cashing of super
  • From 20 September 2007, halving the current pension taper rate to $1.50

Download this guide on how the current rules will be changed under the proposed plan.