New super, rates clarified

Press, 10 July 1979, Page 26

New super, rates clarified

The Minister of Social Welfare (Mr Gair) has written to “The Press” outlining the revised criteria for fixing National Superannuation rates as announced in the Budget. Mr Gair was replying to a letter from a correspondent, R. A. Smitham, who wrote:

“I should like some clarification of the National Superannuation rates announced in the Budget. Mr Gair, the Minister of Social Welfare, is reported as saying that he intends a superannuitant couple to receive 80 per cent of the ordinary-time weekly wage, but that this will now be recalculated as after tax has been paid on such a wage. Is it the Government’s intention to: (1) Adjust the incidence of our progressive direct taxation against National Superannuitants; or (2) deter people from saving in their working lives to supplement the National Superannuation benefit? Such sav-

ings not only provide the country with funds for investment, but may send the superannuation benefit to less than 80 per cent of an average ordinary-time weekly wage after both have been taxed. If such is not the Government’s intention, will this benefit now - be excluded from the gross income of superannuitants on the grounds that this has already been adjusted for?” Mr Gair replied: “The philosophy behind the National Superannuation scheme is that it should provide married couples with 80 per cent of the amount received by a married person earning the average wage. “However, because married superannuitants are generally each taxed on only half this amount, the situation is that married couples receive cash-in-hand National Superannuation equivalent to 87 per cent of the average ordinary-time wage after tax. Accordingly,

from August 28, 1979, the net married couple rate will be fixed at 80 per cent of the average ordinary time weekly wage after deduction of tax at the ‘M’ rate. The gross single rate will continue to be assessed at 60 per cent of the new gross married couple rate. “This change will be brought into effect with the next regular adjustment to the National Superannuation rates in August this year to take account of wage movements revealed in the latest survey of wages and salaries. “Although it is not possible to say in exact dollar terms what the combined effect of the changes will be, it is not expected that any national superannuitant will receive less money in the hand than they are receiving at present. “It is, however, correct that where a superannuitant has other income, the normal P.A.Y.E. tax deductions from

National Superannuation may not be sufficient to meet the individual’s full terminal tax liability. “However, private income has no effect on the actual rate of National Superannuation and, indeed, people in this situation have been generously advantaged by the introduction of the nonincome tested National Superannuation. “Rather than being restricted to an income of 80 per cent of the average W'age, people over 60 are free to determine their own level of retirement income in that they are free to supplement their National Superannuation by their private resources. In this way the National Superannuation scheme does not act as a disincentive for people to make their own additional provision during their working lives, for their own retirement,” Mr Gair said.