| Company | Product | Rate % | Apply |
|---|---|---|---|
 | Virgin Saver | 6.75 |  |
 | USaver | 6.51 | |
 | Online Saver | 6.45 | |
 | High Interest Savings Account | 6.40 | |
 | Reward Saver | 6.20 | |
| Company | Product | Rate % | Apply |
|---|---|---|---|
| USaver | 6.51 |  |
 | iSaver | 6.00 | |
| eSaver | 6.00 | |
| High Interest Savings Account | 6.40 | |
 | Online Saver | 6.00 | |
Rainy Day: Budget affects retirement savings |
By Amy Bradney-George
15 May 2009
The Federal Budget's proposed changes to superannuation have raised a magnifying glass to the ways people save for retirement, and how that will change in the future. The budgetary measures have received a mixed response from industry bodies and commentators, with some stating it is necessary, and others concerned it could negatively impact on retirement savings funds. What are the main measures taken in superannuation in the 2009 Budget, and what do they mean for us? Concessional contributions |
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These standards apply to all superannuation contributions made after tax, however, the limits will only have a significant affect on people who can afford to save $25,000 or more from their taxable. While this is only around 4% of Australian income earners, for those few it indicates that other savings options will help boost retirement funds.
Co-contribution
The Government's co-contribution scheme will move from 150% down to 100% for superannuation amounts contributed between 2009 and 2012. After that it will briefly increase to 125%, before moving back to 150% in 2014.
This means that if you're eligible for the full benefits of the co-contribution plan, every $1000 you contribute to your super fund will be met with up to $1000 from the government between now and 2012. Before now, the potential superannuation savings you could accumulate through government contribution for every $1000 was $1500.
Who is affected?
Superannuation is becoming more and more a part of saving for retirement.
Chief executive of the Association of Superannuation Funds Australia (ASFA), Pauline Vamos, said the compulsory system for superannuation is just "beginning to mature".
She said already about 10% of all retirees rely primarily on superannuation funds, and another 20% place "some reliance" on their super.
But superannuation funds are still relatively low for most retirees, with ASFA reporting about 50% of all retirees having less that $56,000 in accumulated super funds.
The superannuation changes in the budget do not directly increase or encourage people to continue saving up for retirement and, with times as tough as they are, making significant contributions to your super might not be the first thing on your mind.
Losing confidence
Most superannuation funds also have exposure to the share market, which means your nest egg can crack under those financial pressures.
In the last year super funds have lost around $200 billion collectively, which puts anyone nearing retirement at a greater disadvantage.
Peter Promnits, Chief Executive of investment organisation Mercer, said there would also be less confidence in the superannuation system with the changes to concessional contributions.
"Tinkering with the system and making piecemeal changes will potentially damage Australians' confidence in the stability of superannuation rules."
"Anyone playing catch-up for their retirement income - baby boomers nearing retirement or women out of the workforce for extended periods - will be hit by these changes," he said.
If you're concerned about the budget measures and your superannuation fund, get in touch with your provider to discuss the situation. Make sure your savings are secure, either through finding the right super fund and making a savings system that works for you.
To compare some of the best savings account interest rates on today's market visit our savings account comparison page.
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