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Superannuation history

Superannuation history

Retirement income and superannuation have been significant themes for the Commonwealth Government since Federation. In common with other countries Australia’s retirement income system has three component parts or pillars as they are known. The social security Age Pension is its foundation. The compulsory superannuation contributions under the Superannuation Guarantee regime is its second pillar. The third pillar is additional savings, often made through additional superannuation contributions. The following chronology notes some of the significant dates in the development of the current retirement income system.
Comment or Reference
New South Wales introduced a means tested age pension of £26 a year, funded out of general revenue.
Victoria and Queensland followed suit.
The Constitution gave the Commonwealth explicit power to legislate for provision of old age and invalid pensions.
S. 51(xxiii) Commonwealth of Australia Constitution Act 1901
10 June 1908
Invalid and Old Age Pensions Act 1908 passed by the Deakin Government. Rate £26 per year (10/- a week). Eligibility limited according to character, race, age, residency and means. Paid to eligible men and women at 65. Commenced 15 April 1909.
Pension age for eligible women reduced to 60.
1908 Act amended to completely remove the family home from the means test.
Income Tax Assessment Act 1915 provided for tax deductibility of employer contributions made on behalf of employees, and for the exemption of superannuation fund earnings from taxation.
Bruce Government established a Royal Commission to examine the possibility of having a comprehensive national insurance scheme for retirement, sickness or disability.
Royal Commission on National Insurance (7 Sept 1923-5 Oct 1927).
National Insurance Bill introduced. It lapsed in 1929 when the Government was defeated.
National Health and Pensions Bill passed, but its introduction was delayed, then abandoned because of World War 2.
Chifley Government introduced an additional levy on personal income tax which, along with a payroll tax from employers, was credited to the National Welfare Fund. There was, however, no direct link between contributions and benefits and the pension. The National Welfare Fund, whilst set up as a means of establishing a base from which a national superannuation fund could be operated, was in practice merely an accounting device until its abolition in 1985.
Superannuation funds exempt from tax if they held required amounts of Commonwealth Bonds. Commonwealth control of superannuation funds by use of taxation power firmly established.
Income Tax and Social Services Contribution Assessment Act 1961
High Court upholds Commonwealth’s ability to control superannuation fund investment by use of taxation power.
By late 1960s
Means assessed on basis of income plus a proportion of countable assets except for the family home (which has always been assets-test-exempt.) About 70% of people qualifying on grounds of age received the pension.
Only 32% of workers covered by superannuation.
Whitlam Labor Government established the National Superannuation Committee of Inquiry. Chairman Keith Hancock.
Means test for pensioners 75 years of age and over abolished.
Australian Bureau of Statistics conducted the first national survey of superannuation coverage. 32% of the workforce was covered by superannuation 36% male; 15% females.
24% of people in the private sector had super cover compared with 58% in the public sector.
Means test removed for persons aged 70 to 74 inclusive.
Pensions linked to 25% of average weekly earnings, to be indexed annually.
Pensions became subject to automatic increases twice yearly.
Age pension assets test abolished.
The Hancock Inquiry recommended a partially contributory, universal pension system with an earnings-related supplement. A minority recommendation suggested a non-contributory flat rate universal pension, a means tested supplement, and encouragement of voluntary savings through expanding occupational superannuation.
National Superannuation Committee of Inquiry. Final Report. Parts 1 (1976) and 2 (1977)
20 June 1977
Fraser government decides not to establish a contributory national superannuation scheme.
Cabinet Decision 3435 of 20 July 1977 in response to Cabinet Submission No. 1394 of 1977
Pension increases to be adjusted only once a year (in November). Future increases in the Age Pension for those aged 70 or over made subject to an income test.
Fraser Government rejected the recommendations of the Hancock Inquiry.
Pension increases subject to twice yearly increases, in May and November.
May 1983
Base pension for those aged 70 and over subject to an incomes test.
The Statement of Accord (Prices and Incomes Accord) between the ALP and the ACTU was endorsed in February, shortly before the federal election. Claims for wage increases were to be restricted to movements in the CPI.
Hawke Labor Government expressed support for the principles of employee superannuation.
The May Economic Statement began the process of reform of the taxation of superannuation. For lump sums at age 55 or later, the first $50,000 would be taxed at 15%; the remainder at 30%. Lump sums taken below age 55 would be taxed at 30%. These thresholds indexed to AWOTE.
Economy – Ministerial statement , P. Keating, 19 May 1983..
CBUSS - Superannuation for the building industry created, from an idea shared by building union leaders and ACTU officials. Regarded as a world first. (funds owned and controlled by a board comprising equal numbers of employer and employee or union representatives.) A number of other similar funds established in the following years- These funds are called ‘Industry’ Funds.
Age pension assets test reintroduced. Family home excluded.
Renegotiation of the Accord identified superannuation as a key issue.
Labor joined with the ACTU in seeking a universal 3% superannuation contribution by employers to be paid into an industry fund, in lieu of a wage rise.
Accord Mk II between the Government and the unions stipulated that compensation to employees should be 6% (to keep pace with inflation). This was to be 3% employer superannuation contribution, a 2% wage rise, and tax cuts.
Agreement endorsed by the Conciliation and Arbitration Commission February 1986.
Employer groups, including the Confederation of Australian Industry, challenged the Commission’s decision in the High Court, claiming that superannuation was not an industrial matter within s.51 (xxxv) of the Constitution.
15 May 1986
High Court ruled in favour of the Conciliation and Arbitration Commission.
June 1986
National Wage Case established guidelines to require new industry superannuation schemes to conform to Commonwealth operational standards.
Insurance and Superannuation Commission (ISC) was established as an industry regulator.
Superannuation funds total assets $41.1bn.[1]
ISC Annual Report 1988–89
21 December 1987
The Government introduced the Occupational Superannuation Standards Act 1987 (OSSA).
Operating standards were prescribed for the vesting of benefits from employer and employee contribution; preservation of benefits until age 55; more member involvement in the control of superannuation funds; security of members’ benefits.[2]
May 1988
Hawke Government statement Reform of the Taxation of Superannuation contained measures to bring forward payment of superannuation taxation liabilities by introducing a tax on contributions and reducing tax on benefits. Reasonable Benefits Limits introduced.
The Reform of the Taxation of Superannuation, Office of the Treasurer, 1988
June 1988
51.3% employed persons covered by Superannuation
Australian Social Trends 1995 ABS Cat 4102.8
The Government's 1989 retirement income policy statement established a policy in Australia based on the "twin pillars" of the age pension and private superannuation, specifically rejecting the option of a National Superannuation Scheme.
Better Incomes: Retirement Income Policy into the Next Century (Howe,1989)
December 1989
Superannuation funds total assets $119bn
ISC Annual Report 1989–90
December 1990
Superannuation fund assets $123bn, 64% of all employees had superannuation coverage.
ISC Annual Report 1990–91
In the Budget, Treasurer John Kerin announced that from 1 July 1992 , under a new system to be known as the Superannuation Guarantee (SG), employers would be required to make superannuation contributions on behalf of their employees.
Budget speech, 20 August 1991
March 1992
Superannuation Assets estimated to be $148bn.
ISC Annual Report 1991–1992.
June 1992
Senate Select Committee on Superannuation presents its first report. This Senate Committee, in various forms, reviewed and issued reports on various superannuation issues up to the end of the 40th Parliament (2004). Many of these reports led to significant changes in the superannuation system.
Safeguarding Super – The Regulation of Superannuation
Labor Government implemented the Superannuation Guarantee (SG), which extended retirement savings to 72 % of workers.
Employers were required to make prescribed contributions on behalf of their employees to a complying superannuation fund.
Super contributions were to be progressively increased between 1992-2002, from 3% to 9%.
Labor Government overhauls regulation of superannuation with introduction of the Superannuation Industry (Supervision) Act 1993 (SIS Act). The OSSA continues in force but many of its provisions are repealed and transferred to the SIS Act.
World Bank endorses Australia’s three pillar system for the provision of retirement income as world’s best practice.
June 1993
Superannuation assets reaches $169bn
ISC Annual Report 1992–93.
June 1993
FitzGerald report advocates increasing household savings via superannuation, but recommends that national savings be increased by increasing public sector savings. Superannuation’s role in increasing national savings no longer seen as important. This is a significant change in the policy rational for superannuation system.
Dr Vince FitzGerald - National Savings: A Report to the Treasurer
November 1993
80% of employed persons either made superannuation contributions or had them made on their behalf.
Pension age for eligible women to be raised to 65, in a phased process.
June 1994
Superannuation assets $183bn
ISC Annual Report 1993–94
In the 1995 budget speech Treasurer Ralph Willis outlined plans to pay previously announced tax cuts into employee’s superannuation funds. Government to make matching contributions. The principal of matching government superannuation co-contributions established.
Budget Speech 9 May 1995 and accompanying statement Saving For Our Future
Shadow Treasurer Peter Costello called for employee choice and for funds to “compete for business”
Address to ASFA (Australian Superannuation Funds Association), 2 Nov 1995.
March 1995
Superannuation Assets $187bn.
ISC Annual Report 1994–95
June 1995
80.5 % employed persons covered by superannuation
Australian Social Trends 1995 ABS Cat 4102.8
June 1996
Superannuation assets $245.3bn, 37.9% of GDP
20 August 1996
Superannuation Surcharge introduced by Treasurer Peter Costello in the Howard Government’s first budget.
Wallis Financial System Inquiry, established by Treasurer Costello in May 1996, advocated superannuation choice and other changes to the superannuation system.
Age pension to be formally maintained at 25% AWOTE.
Retirement savings accounts (RSA) established.
Superannuation surcharge implemented.
Maximum age for SG contributions increased from 65 to 70.
Limited access to superannuation possible on compassionate grounds.
SIS Reg 19A
June 1997
Superannuation assets $321.0bn, 47.7% of GDP, 81% were covered by superannuation.
9 December 1997
Limited access to superannuation possible if member is in severe financial hardship. This is defined as being in receipt of commonwealth income support for a continuous period of 26 weeks or a cumulative period of 39 weeks.
SIS Reg 6.01
Age pension means test for retirement income streams revised. Pension Bonus scheme introduced. A person could accrue a pension bonus payment by deferring claiming the pension while still working.
Reforms to business taxation, including proposals to reduce the CGT rate for super funds to 10%
Australian Prudential Regulation Authority established on 1 July 1998 . APRA is the lead superannuation regulator. The Australian Securities and Investments Commission also took a significant role in the regulation of superannuation. The Australian Taxation Office continued to carry out some regulatory functions and administer the superannuation taxation legislation. The Insurance and Superannuation Commission ceases to operate on the same date. These changes were in response to the recommendations of the Wallis Inquiry.
June 1998
Superannuation assets $360.3bn, 51.2% of GDP
In 1999, the SIS Act was amended to establish a new category of small superannuation fund, the Self Managed Superannuation Fund to be regulated by the Australian Taxation Office.
June 1999
Superannuation assets $411.4bn, 55.6% of GDP
8 October 1999
Australian Taxation Office took administrative responsibility for Self Managed Superannuation Funds (SMSF).
June 2000
Superannuation assets $484.2bn, 63.0% of GDP, 87% of employed persons (both part and full time workers) covered by superannuation.
Financial Services Reform Act is designed to be a single licensing and disclosure approach for all financial services, including superannuation. Commenced in March 2002.
June 2001
Superannuation assets $519.0bn, 66.2% of GDP
Maximum age for superannuation contributions increased from 70 to 75 (for people working at least 10 hours a week).
June 2002
Superannuation assets $518.1bn, 63.7% of GDP
1 July 2002
Temporary residents permanently departing Australia may withdraw their accumulated superannuation benefits before their preservation age. This does not apply to New Zealand residents.
SIS Regs 6.20A, 6.20B & 6.24A
28 December 2002
Superannuation assets able to be divided between the parties in a marriage breakdown
Part VIIIB Family Law Act 1975
Superannuation surcharge reduced from 15% to 12.5%.
Government co-contribution for low/middle income earners introduced.
June 2003
Superannuation assets $546.8bn, 65.2% of GDP, 90% of employed persons have employer provided superannuation.
APRA Insight 2007, ABS Cat 6310
1 July 2003
Superannuation co-contributions policy takes effect in respect of personal (or undeducted) contributions made after this date.
25 February 2004
On 25 February 2004, the Treasurer released A more flexible and adaptable retirement income system as part of ‘Australia’s Demographic Challenges’ announcement. Amongst other things this report proposed to allow access to a person’s superannuation, in the form of an income stream, before they had left the work force (i.e. transition to retirement pensions) and to scrap the work test for those under age 65.
Superannuation Safety Amendment Act 2004 enacted changes to regulation of superannuation. All superannuation trustees of large eligible funds have to be licensed from 1 July 2004. Trustees of SMSFs do not have to be licensed.
Superannuation regulations changed to allow the portability of money between different superannuation accounts.
SIS Regs 6.28 and 6.29
Employee choice of fund passed Senate in June, to come into operation from 1 July 2005.
Superannuation surcharge reduced from 12.5% to 10%.
Tax free payment of superannuation benefits can be made to the surviving partner on an interdependent relationship. An interdependent relationship can encompass same sex couples, or a relationship where one person is financial dependent on another person. For example, were a son or daughter is financially supporting a parent.
SIS Reg 10(1) and 10A
June 2004
Superannuation assets $643.0bn, 73.6% of GDP
1 July 2004
Work test governing contributions made under age 65 ceased to operate. Work test remains for contributions made above age 65.
10 May 2005
Treasurer Costello announced in the Budget the abolition of the Superannuation Surcharge. Changes take effect from 1 July 2005
June 2005
Superannuation assets $762.9bn, 85.1% of GDP, 90% of employed persons have employer provided superannuation.
APRA Insight 2007, ABS Cat 6310.
1 July 2005
Transition to Retirement Pensions available. A member may commence to receive a transition to retirement pension without having to leave the workforce or retire. Choice of Superannuation Fund takes effect.
SIS Reg 6.01.
1 Jan 2006
Contributions Splitting took effect. A Member’s SG and other contributions may be split with their spouse.
SIS Regs 6.40 – 6.46
9 May 2006
In the Budget, Treasurer Costello announced plans to simplify superannuation. “Simpler Super” includes:
- exemption from tax on end benefits for Australians aged 60 or over from I July 2007;
- no tax on a lump sum;
- no tax on a superannuation pension;
- reasonable benefit limits to be abolished; and
- transferring super between funds made easier. Implementation date is 1 July 2007.
June 2006
Superannuation assets $912.0bn, 98.8% of GDP, 90% of all employed persons covered by superannuation.
June 2007
Superannuation assets $1153.3bn (i.e. 1 trillion), 119% of GDP.
APRA Quarterly Superannuation Performance June 2007, ABS Cat 5206.0.
1 July 2007
Most Simplified Superannuation amendments take effect. Bulk of operating superannuation tax law now in the Income Tax Assessment Act 1997. Prudential and operational aspects now largely in the SIS Act. Residual parts of superannuation law remain in Income Tax Assessment Act 1936.
11 September 2007 Measure applies to lump sums paid on or after 1 July 2007
Tax free benefits able to be paid to those with a terminal illness.
Minister for Finance and Assistant Treasurer Press Release, ‘Australians with a terminal illness now able to draw their super tax free
Schedule 2 Tax Laws Amendment (2008 Measures No. 1) Bill 2008 also s 303-10 ITAA 97.
20 September 2007
Social Security assets test threshold raised from $531,000 to $839,500 (couple); from $343,750 to $529,250 (single); it is estimated that more than 300,000 extra people will be eligible for the age pension.
31 December 2007
Employee’s ability to recover unpaid superannuation amounts from employers that have ceased operating enhanced.
Sub paragraph 556(1)(e) Corporations Act 2001.
3 March 2008
Minister for Superannuation and Corporate Law Sherry announced the establishment of a Superannuation Advisory Group to advise on “matters relevant to current or prospective
superannuation legislation and on Government policy proposals which have significant impact for the superannuation industry.”
5 May 2008
Minister Sherry announces consultation on a measure introduced by the Coalition Government which required future superannuation contributions and existing balances for temoporary residents to be transferred to the ATO. If these were unclaimed after 5 years, the amounts would be confiscated. Extra revenue of up to $1 billion a year is predicted.
13 May 2008
Labor’s first Budget contains details of a review of taxation – “Australia’s future tax system”, to be chaired by Dr Ken Henry. Terms of reference include the government’s commitment to preserve tax-free superannuation payments for the over 60s.
19 May 2008
Minister Sherry announced that universal forecasting of superannuation end-benefits could be introduced to enable better understanding of retirement savings.
28 May 2008
Attorney-General Robert McClelland introduced the first of a range of amendments to remove same-sex discrimination from Acts governing Commonwealth superannuation schemes. This ensures that same-sex couples are not denied the payment of death benefits from superannuation schemes or the tax concessions on death benefits currently made available to opposite-sex couples.
June 2008
ASIC begins to provides advice on long term superannuation returns
17 Jun 2008
The Same-Sex Relationships (Equal Treatment in Commonwealth Laws—Superannuation) Bill 2008 is sent to a committee inquiry without an “end date”
25 June 2008
Legislation providing further relief for employers who make a late superannuation guarantee contribution receives Royal Assent
26 June 2008
Minister Sherry announced a review of pension indexation arrangements for Australian Government superannuation schemes (civilian and military). The review commences in July and is expected to conclude by the end of 2008.
December 2008
Review of Australian government pension indexation (Mathews Review) completed. Report not released to the public.
18 December 2008
Act requiring temporary resident’s superannuation benefits to be paid to the ATO, if not claimed within 6 months of departing Australia, commences operation.
4 December 2008
Royal Assent to the Same-Sex Relationships (Equal Treatment in Commonwealth Laws—Superannuation) Bill 2008 (No. 107 of 2008) passes through Parliament.
1 April 2009
Act raising tax rates of Temporary Residents superannuation benefits when paid takes effect.
28 April 2009
Minister Sherry announces Review into the governance, efficiency, structure and operation of Australia’s superannuation system.
4 May 2009
Release of the Report on Strategic issues for the Retirement Income System – as part of the Australia’s future tax system inquiry (Henry Review). Amongst other things recommends that superannuation guarantee contribution rate remain at 9 per cent of ordinary time earnings and retains the $450 per month minimum wage threshold for superannuation guarantee purposes.
29 May 2009
Minister Sherry announces the terms of reference and makeup of Review into the governance, efficiency, structure and operation of Australia’s superannuation system.
1 July 2009
Rate at which government superannuation co-contribution is paid reduced temporarily between 1 July 2009 and 30 June 2014. Rate returns to $1.50 for every $1 contribution (subject to income test threshold) on 1 July 2014.
1 July 2009
Limit on concessional contributions (formally known as tax deductible contributions) reduced from $50 000 p.a. to $25 000 p.a. for 2009–10 and later years. This limit is indexed to changes in AWOTE (if those changes are sufficiently large enough). Transitional measures remain in place for those over 50 years of age to 2011–2012. Annual limits on non-concessional contributions (i.e. after tax contributions) are now 6 times the limit on concessional contributions for those under 50 years of age (i.e. 6 times $25 000 or $150 000 p.a. for the 2009–10 year).
1 July 2009
Income for government superannuation co-contribution purposes now includes a person’s reportable employer superannuation contributions. That is the amount that the employer puts into superannuation on the employee’s behalf that exceeds the superannuation guarantee requirements.
1 July 2009
Expanded definition of ‘ordinary time earnings’ for superannuation guarantee purposes takes effect. ‘Ordinary time earnings now include over award payments, shift loadings, allowances and piece rates paid in relation to a person’s ordinary hours of work. It does not include overtime payments.
Later regulation specifically exempted parenting payments from definition of ‘ordinary time earnings’ for superannuation guarantee purposes.
9 July 2009
Superannuation funds now able to offer limited financial advice to their members.
21 August 2009
Release of the Mathews Report recommends that government superannuation pensions continue to be adjusted by increases in the Consumer Price Index (CPI). Government fully supports this recommendation.
20 September 2009
The rate of the age pension was raised by $30 per week for single people. Existing pension supplements were consolidated into one pension supplement and increased by $2.49 per week for single people and $10.14 per week for couples.
The 25% of MTAWE adequacy benchmark was adjusted to 27.7% for single people and 41.76% for couples. A new prices measure called the Pensioner and Beneficiary Living Cost Index (PBLCI) was added to the pension indexation process. Where the increase in the PBLCI is greater than that for the CPI it will be used instead of the CPI in the indexation process.
The pension income test taper rate was increased from 40% to 50%. A work bonus was introduced that exempted half of any income from employment up to $500 per fortnight from consideration under the income test.
The Pension Bonus Scheme was abolished
14 December 2009
Release of phase one preliminary report of the Review into the governance, efficiency, structure and operation of Australia’s superannuation system (i.e. the Cooper Review) on superannuation fund governance
January 2010
Formal inclusion of specific superannuation funds (usually industry funds) in industrial awards. This change does not restrict an employee’s right to have contributions made to a superannuation fund of their choice
Paragraph 139(1)(i) of the Fair Work Act 2009
20 April 2010
Release of Cooper Review Phase two preliminary report – ‘Mysuper, optimising Australian superannuation’.
29 April 2010
Release of Cooper Review Phase three preliminary report – ‘Self managed super solutions’.
2 May 2010
Government response to Australia’s future tax system review (i.e. the Henry Review) released. Superannuation Guarantee rate proposed to be raised to 12% between 2013–14 and 2019–20, Superannuation Guarantee age limit to be increased to 75 in from 1 July 2013, an annual superannuation contribution of up to $500 provided for those receiving and adjusted taxable income of up to $37 000 p.a. and the concessional contribution cap for those over age 50, with less than $500 000 in total superannuation benefits to be permanently raised from $25 000 to $50 000 p.a. Proposed measures repeated in budget papers released on 11 May 2010 (see below).
11 May 2010
Government proposed changes to Co-contributions scheme. Income thresholds applying for 2009–10 to continue for a further two years, Government co-contribution rate to be set permanently at $1 for every $1 of personal contributions made by those receiving an adjusted annual income less than $31 920 p.a.
July 2017
The qualifying age for the age pension will increase by six months every two years until it reaches 67 years of age on 1 January 2024




Family and Community Services and Indigenous Affairs (FACSIA), ‘A Compendium of legislative changes in social security 1908–1982’, Occasional Paper No 12, 1983, reprinted 2006.
Family and Community Services and Indigenous Affairs (FACSIA), ‘A Compendium of legislative changes in social security 1983-2000’, Occasional Paper 13, June 2006.
Australian Prudential Regulation Authority, A Recent History of superannuation in Australia, APRA Insight, Issue 2, 2007
A. Borowski, ‘The Revolution that faltered: two decades of reform of Australia’s retirement income system’, International Social Security Review, v.58(no. 4), 2005, pp.45–65.
P. Gallagher, P and A. Preston,’ Retirement Income Modelling and Policy Development in Australia, 1993’, Treasury Retirement Income Modelling Task Force, 1993.
The Hon. J.P. Keating MP, Treasurer, Reform Of The Taxation of Superannuation, 25 May 1988
Commonwealth Government, Treasury,’ Towards higher retirement incomes for Australians - A History of the Australian retirement income system since Federation’, Economic Roundup, 1 January 2001.
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