Supporting retirement savings

A robust and sustainable retirement income system is critical to meet the challenges faced by the ageing of Australia's population.

The age pension in combination with compulsory superannuation savings are the foundations of the retirement income system.

The Government has built on these foundations by encouraging greater participation by individuals in the retirement income system.

The introduction of the superannuation co-contribution is a significant commitment by the Government to

improving the retirement income of low to middle income earners.

The co-contribution commenced in 2003-04 with a one-for-one match by the Government. In 2004‑05 the Government increased the matching rate to $1.50 and made more people eligible.

In recognition of the effort people have already made to save for their retirement the Government will double the co-contribution for eligible contributions made in 2005-06.

This measure builds on the major improvements the Government has made to the superannuation system.

As of 1 July 2005, the Government abolished the superannuation surcharge.

The Government's Simplified Superannuation reforms will take effect from 1 July 2007. Under these reforms benefits paid to retirees aged 60 or above from a taxed fund will be exempt from tax.

These reforms significantly simplify superannuation, improve retirement income, increase incentives to save for retirement and extend full tax deductibility for contributions and the co‑contribution to the self‑employed.