The long-placed income threshold limit for superannuation is expected to be abolished in July 2022. Low-income workers are anticipating the much-needed change as the days draw close.
Previously, in order to be eligible for superannuation, the earned income was set to be at least $450 or more. This left the low-wage earners, part-time workers, and people with multiple jobs in dismay as they could not make it to the cut.
It was especially rough on women as it is mostly them with minimum opportunities at high-paying jobs as many work for small-scale businesses that do not pay enough. This exacerbated the already present gender pay gap issue. It leaves them with no financial security for their retirement making things even more difficult for them.
Why now?
The discourse on removing the limitation completely has been in the status quo for a while now with many unions actively protesting against this unfair limitation. It only seemed fitting to propose the removal of the $450 per month income budget in the 2021 budget to improve equity on an economic security level.
What does it mean for low-income employees?
The employees regardless of how much they earn will be able to accrue superannuation through their income securing their financial ends. However, the legislation has not been formally passed, the employees can look forward to the good news in early July 2022.
Where does this leave the employers?
The employers will also be required to adopt the new rule when it passes. In the meantime, it is wise to prepare for the expected removal of the $450 super threshold.
As per the current rules, employers made SG contributions to:
- 18 years and older. With $450 or more as their monthly salary (before tax).
- Under 18 years of age. With $450 or more as their monthly salary (before tax) working for more than 30 hours a week.
Dates to remember:
Legislation announced: Before July 2022
Proposed change expected: 1 July 2022
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