The Federal Budget 2022

What does it mean for your super and pension?

There were no big surprises for the super industry in this year’s federal budget. Super and pension members can expect to see the following changes (which were originally proposed in 2021) start coming into effect from 1 July 2022.

Superannuation and retirement

• First Home Super Saver Scheme

The First Home Super Saver Scheme will increase from $30,000 to $50,000, meaning super members can save more of their first home deposit using their super account.

• Work Test

The Work Test for retirees will be abolished on 1 July 2022. Under the change, retirees aged between 67 and 74 can top up their super without having to prove they are working a certain amount, provided their super is under $1.7 million.

• Downsizer Scheme

For members who are looking to sell their family home and make a sizeable contribution to their super, the Downsizer Scheme will see the age of eligibility lowered to 60. It will also see an increase in the amount able to be contributed to $300,000 per individual or $300,000 each per couple outside of other contributions.

• Superannuation guarantee

The superannuation guarantee will increase to 10.5% on 1 July 2022 and is still scheduled to increase, in increments, to 12% by 2025.

• Minimum drawdowns for pension accounts

The minimum drawdown requirements will remain at their current halved amount for the next financial year, allowing retirees to continue having more money invested in their super while drawing down an income from their pension product.

• Removing the $450 threshold

Under this change, any employees who earn less than $450 a month will now be eligible for super on top of their wage. If an employee is under 18, however, they must be working more than 30 hours a week to be eligible (unless covered by a workplace agreement that states otherwise).

Cost of living

The big news out of the Federal Budget is around the temporary measures to ease the pressure on cost-of-living expenses.

• Tax cuts

Low- and middle-income earners can expect a little bit extra in their tax return this year. The low and middle income tax offset will be boosted by $420 to a maximum refund of $1500.

• Cash payments

A one-off $250 cash payment will be available to pensioners and concession card holders in April.

• Fuel

The fuel-excise tax will be halved for the next six months, reducing the cost of petrol per litre to 22.1 cents. For regular drivers of diesel or petrol cars, this could mean savings of up to $700.

Other important changes for First Super members

• Parental leave

Changes to the government’s paid parental leave have also been proposed, although are not expected to come in until April next year. The major change is around the 20 weeks of leave per household. Currently, it must be split 18 weeks to 2 weeks for primary and secondary care givers. From next year it can be taken by either parent.

• Small business

Training courses designed to upskill staff and expenditure on new technologies can be claimed as deductions at 120% of the cost. This is for small businesses with an annual turnover of less than $50 million.