Federal Budget 2009 » Superannuation changes

Reduction in contribution caps
Date of effect: 1 July 2009

The concessional contribution (CC) caps for those under and over age 50 will be halved from 1 July 2009. As a consequence of these changes, the annual non-concessional contribution (NCC) cap will become six times the CC cap (as it applies to those under age 50).

The reduction to the CC cap will affect salary sacrifice and transition to retirement pension strategies. In addition, the NCC cap will not be increased for 2009/10. Grandfathering arrangements will apply to ensure that the employer funding rate for existing defined benefit arrangements in place at 12 May 2009 are deemed to meet the new reduced cap.

Reduced Government co-contribution
Date of effect: 1 July 2009 - 30 June 2014

As anticipated, there has been a reduction to the maximum rate and amount of Government co-contributions for eligible clients who make personal after-tax contributions to super. This is a temporary reduction and applies in the five years from 2009/10 to 2013/14. From 2014/15 the co-contribution again increases to a maximum of $1,500. The reduction to the maximum rate and amounts of the Government co-contribution are summarised in the table below.

Contribution year	Matching rate %	Maximum co-contribution
2009/10	100%	$1,000
2010/11	100%	$1,000
2011/12	100%	$1,000
2012/13	125%	$1,250
2013/14	125%	$1,250
2014/15 onwards	150%	$1,500

Pension drawdown relief continued
Date of effect: 1 July 2009 - 30 June 2010

In a press release on 18 February 2009, the Government announced that clients in account based pensions, allocated pensions and term allocated pensions (TAPs) would only be required to draw down half their calculated minimum income requirement3 for 2008/09. This relief has been extended for a further 12 months to 30 June 2010.
The reduced drawdown rates are set out in the table below.

Age at start of pension and each 1 July	Original percentage of account balance (pa)	Reduced drawdown % for 2009/10
Under 65	4%	2.0%
65-74	5%	2.5%
75-79	6%	3.0%
80-84	7%	3.5%
85-89	9%	4.5%
90-94	11%	5.5%
95 or more	14%	7.0%

Portability of super between Australia and New Zealand
Date of effect: Unknown

The Australian and New Zealand Governments have agreed to establish a portability scheme that would allow members of funds in each country to transfer their super benefits between complying superannuation entities in each jurisdiction. This measure is intended to support moves to generate a single economic market between Australia and New Zealand.

Super Guarantee and Ordinary Time Earnings

The ATO is due to issue its final ruling on Ordinary Time Earnings (OTE) which, from 1 July 2008, is the minimum amount on which an employer must calculate their SG liability. This ruling is due to be released on 13 May 2009 and will include salary paid while on parental leave and other ancillary leave payments in the definition of OTE for SG purposes.
However, the Government intends to make it clear that SG contributions based on OTE will not need to include such leave payments at least until the end of the review period for the paid parental leave scheme in 2013.