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11.2.1 The Age Pension
The first pillar is the public age pension, provided by the government (Agency 2017;
Coates 2018). The age pension is designed as a ‘safety net’ income stream (Agnew
et al. 2013; Coates 2018). Eligibility for the age pension is determined by comprehensive means testing, which includes assessing eligible income and assets (excluding the family home) (Agnew et al. 2013). Eligible assets that are assessed include,
but are not limited to, investment properties, financial investments, superannuation
investments, business assets, motor vehicles, collectable items etc. (Services 2019b).
At present, the current maximum pension payment per fortnight for a single retiree
(including the energy supplement) is $916.30, and for a couple, it is $1381.40
(Services 2019a).
11.2.2 The Superannuation Guarantee
The second pillar is the mandatory superannuation guarantee, or a defined contribution (DC) scheme. While Australia’s history of occupational superannuation
schemes can be traced back to federation, the mandatory superannuation guarantee
was legislated by the federal government in 1992
2
(Brunner and Thorburn 2008).
The superannuation guarantee mandates for a percentage (9.5%) of an employee’s
ordinary time earnings to be paid to a nominated super fund
3
(SuperFunds 2019).
Funds paid into a superannuation scheme can only be accessed at retirement age
(preservation age).
4
When superannuation legislation was first introduced, the mandatory level of employer contributions was 3%; however, the required minimum
level has gradually increased to 9.5%. By July 2025 it is expected to increase to 12%
of ordinary time earnings (Office 2019). Critically, the superannuation guarantee is
not extended to workers who earn less than $450 in salary or wages, from a single
employer, during a calendar month (Office 2018c). The total amount of super available at retirement depends upon a number of factors, such as contributions made
during an employee’s working life (concessional contributions); private
(non- concessional) contributions; the fund’s investment returns; and finally, fees
and tax paid on contributions (MoneySmart 2019).
2 Superannuation Guarantee (Administration) Bill 1992
3 There are various distinct types of super funds, including industry schemes, corporate schemes
and self-managed funds; see Brunner and Thorburn (2008, p. 15) for a typology.
4 The current minimum preservation age (the age your super must be ‘preserved’ until) is between
55 and 60 depending on the year of birth; see Office (2015).
C. Power
11.2.1 The Age Pension
The first pillar is the public age pension, provided by the government (Agency 2017;
Coates 2018). The age pension is designed as a ‘safety net’ income stream (Agnew
et al. 2013; Coates 2018). Eligibility for the age pension is determined by comprehensive means testing, which includes assessing eligible income and assets (excluding the family home) (Agnew et al. 2013). Eligible assets that are assessed include,
but are not limited to, investment properties, financial investments, superannuation
investments, business assets, motor vehicles, collectable items etc. (Services 2019b).
At present, the current maximum pension payment per fortnight for a single retiree
(including the energy supplement) is $916.30, and for a couple, it is $1381.40
(Services 2019a).
11.2.2 The Superannuation Guarantee
The second pillar is the mandatory superannuation guarantee, or a defined contribution (DC) scheme. While Australia’s history of occupational superannuation
schemes can be traced back to federation, the mandatory superannuation guarantee
was legislated by the federal government in 1992
2
(Brunner and Thorburn 2008).
The superannuation guarantee mandates for a percentage (9.5%) of an employee’s
ordinary time earnings to be paid to a nominated super fund
3
(SuperFunds 2019).
Funds paid into a superannuation scheme can only be accessed at retirement age
(preservation age).
4
When superannuation legislation was first introduced, the mandatory level of employer contributions was 3%; however, the required minimum
level has gradually increased to 9.5%. By July 2025 it is expected to increase to 12%
of ordinary time earnings (Office 2019). Critically, the superannuation guarantee is
not extended to workers who earn less than $450 in salary or wages, from a single
employer, during a calendar month (Office 2018c). The total amount of super available at retirement depends upon a number of factors, such as contributions made
during an employee’s working life (concessional contributions); private
(non- concessional) contributions; the fund’s investment returns; and finally, fees
and tax paid on contributions (MoneySmart 2019).
2 Superannuation Guarantee (Administration) Bill 1992
3 There are various distinct types of super funds, including industry schemes, corporate schemes
and self-managed funds; see Brunner and Thorburn (2008, p. 15) for a typology.
4 The current minimum preservation age (the age your super must be ‘preserved’ until) is between
55 and 60 depending on the year of birth; see Office (2015).
C. Power