Superannuation Pensions

Australia has two principle sources of retirement income, which include Superannuation, which is a fund that is comprised of employee contributions for their employees to be used as income after retirement. The other form of retirement income is The Age Pension, which is subsidized by taxpayers and paid by the government. The Australian superannuation fund is provided to workers through their employees, which they are obliged to pay. The minimum contributions that can be made consist of nine percent of each employee’s selective salary, which includes ordinary time earnings, which is then formed as a compulsory retirement fun. This fund has to be registered with and authorized by the Australian government.

Employers Contributions
Some employers choose to pay their workers their set salaries, and separately make additional contributions to their employees Superannuation Pensions. Some employers also deduct a monthly percentage from their employees’ remuneration packages, which goes directly into their Superannuation Pension fund. If you compare different superannuation pension packages, you have to understand clearly which approach works best while deciding upon Superannuation Pension funds. Most Australian workers have their superfund in equated superannuation funds, which in essence, enable them to invest almost two-thirds of their retirement funding into the stock markets of the world today. As superannuation funds are not final salary schemes, your income when you retire from your working life entirely relies on the performance of funds. Many employees rebalance their funds by transferring their money into more stable investments when their retirement age is near.

Individual Contributions
Individuals also have the option to add personal contributions to their superannuation pensions to the 9% contributions made by their employer, based on their monthly wages. Most people in Australia just receive superannuation supplements from the Government’s age pension, which provides them with added income when they retire.
A Pension account or an allocated Pension can open up various different investment choices, enabling you to potentially expand the value of your investments, while producing a steady income stream simultaneously. This can be done by taking your super as a whole amount.


You might face certain tax related issues, and your choice would be based on the deciding factors suited as per the requirements of your situation. Doing this would necessitate taking the relevant investment strategy that fits your desired retirement lifestyle and the amount of time you can make your Superannuation Pension last, based on the fact that account based pension is tax free after you turn sixty. It is also advisable to seek professional advice regarding how you would structure your super and retirement income prior to your retirement, which would help you enhance your tax and Centrelink benefits.

Superannuation Pensions Eligibility
To be eligible for the Age Pension in Australia, you have to be a minimum sixty five years of age, along with being an Australian resident or citizen for at least a decade. The Age Pension is worth $17,443 for people who are single and $26,296 for couples. This budget has been in effect from 20th March 2011.
Additional benefits for people who need higher income support has the possibility of increasing the amount of the determined aged pension, to a maximum of $18,962 for individuals that are single and $28,584 for couples.

Superannuation Qualifying Age
The qualifying age for being eligible for receiving the Age Pension is said to be increased from sixty five, to 65.5 years, which would then increase at a constant interval of six months every two years from 2017. The qualifying age for the eligibility of receiving Age pensions would reach sixty seven in 2023. Eligibility for the recipients of the Australian Age Pensions is determined by testing their income and assets.

Superannuation for Singles
Single individuals that are also homeowners are eligible for the full Age Pension if they have other assets which are worth less than $181,750. The amount set for homeowner couples with the asset cut off is set at $258,000. For individuals that are single and do not own their own home, with assets worth less than $313,250, they qualify for the full Age Pension along with couples that do not own their own home, and have assets which are worth less than $389,500. After these, a sliding scale is functioned, reducing Pensions by $1.50 per fortnight for every $1000 of assets which exceed the figures which are quoted above.

As of 20th March 2011, if an individual person’s income that does not include government age pension, is less than a hundred and forty six dollars per fortnight, or a couple’s income is less than $256 per fortnight, they will be eligible for the full Superannuation Pension. If the income being earned is a higher amount than the ones listed above, the payable superannuation pension is reduced by fifty cents in the dollar for single people and twenty five cents in each dollar for couples.
The fiscal years 2008-09 and 2010-11, the superannuation regulations were revised to decrease the minimum annual pension payment by fifty percent. In the years 2011-12, this decrease has been extended for self funded individuals that have reached retirement, with the minimum payable amount for account based pensions by 25%.
A reduction of this kind will aid asset holders of their products to recuperate any capital losses that might have incurred as a consequence of the global fiscal crisis. The minimum payable amounts are set to revert back to the normal figure in 2012-2013.
An example of this could be of an individual that has retired, and is self funded. At sixty years of age, the retiree is currently required (during a year) to withdraw a minimum annual pension payment which is calculated as four percent of his/her account balance, as at the 1st of July or of the account balance as at the inauguration date of the pension if it had been inaugurated during the same year. Under these regulations the percentage is reduced to 3% for the 2011-2012 fiscal years.

Review Superannuation Pensions Scheme
On the 21st of August in 2009, the then Minister for Finance and Deregulation, Lindsay Tanner, declared that the Government will fully support the findings and the recommendations of the review of Pension Indexation Arrangements that will be decided upon in the Australian Government Civilian and Military Superannuation Pension Schemes. This review on the Superannuation Pension Schemes was conducted by Trevor Matthews, whose report shows a comprehensive examination of the purpose behind pension indexation in professional superannuation schemes, along with considering whether the present Consumer Price Index pension indexation methodology in the schemes should be altered. It acknowledges the review’s term of reference and other matters which were addressed in submissions to the review along with hearings that took place in Canberra. It also provided materiel to the review regarding the compilation of the Consumer Price Index (CPI).

Superannuation Pensions indexed against inflation
Trevor Mathews summed up his report by stating that pensions which are provided by the Australian Government Civilian and Military Superannuation Schemes are still continuing to be indexed against the effects of price increases due to inflation. He advised that these pensions should remain to be indexed by the Consumer Price Index, as it is the most suitable index currently available to save pensions from being affected by the inflationary pricing increases. Mr. Matthews additionally suggested that if a strong index which shows the price inflation phenomenon of superannuation pensions better than the Consumer Pension Index is made available sometime in the future, the Australian Government should take it under consideration for the purpose of indexing Australian Government Civilian and Military Superannuation Pensions.

Tax Offsets of Superannuation Pensions
As of 1st July 2007, there are two main tax offsets that are applicable to the recipients of superannuation pensions. These include a tax offset which is equal to fifteen percent of the pension which is developing from the taxed source for the members eligible for superannuation pensions. It also includes another tax offset equal to fifteen percent of the pension which has been developing from the taxed source specifically for those recipients who are aged between the preservation age, which is currently set at fifty-five and fifty-nine. Finally it includes a tax offset which is equal to ten percent of the Superannuation Pension which is paid from an untaxed source, where the recipient of the pension is aged sixty or above.

Commonwealth’s Public Sector Superannuation Scheme
Some forms of pensions which are given, like those that are paid from the Commonwealth’s Public Sector Superannuation Scheme (also known as PSS), might conta8in payments that come from both a taxed and an untaxed source, with some additional tax-free amounts which represent the return of own contributions. These pensions qualify for both of the above mentioned tax offsets, on the components which are relevant to them.

On the 18th of February 2009, the Government suspended the minimum payment clause for those superannuation pensions which were account based for the late half of 2008 and 2009. They accomplished this through a fifty percent discount on the minimum payment amounts that would other be applicable for the 2008 -2009 years. These were the regulations which were formulated to implement this policy throughout the 2008-2009 fiscal years. This policy was extended to the 2009–2010 year (only) on 12 May 2009.