Budget winds back the clock

Retirement and the age 65 go together like hand and glove. It is the one number most Australians could quote with certainty about our superannuation and pension system. The age 65 has been enshrined in the way we define and plan our working lives. So changing it - albeit slowly and over six years - is a big deal.

The 2009-10 Federal Budget has been developed against a backdrop of the worst economic downturn in 70 years. The collapse in government revenue and the corresponding increase in government debt is staggering both in its speed and size - even if on a relative basis Australia is forecast to come out of the recession in better shape than almost all the other developed world economies.

The most direct change to super is the reduction of salary sacrificed contributions that can be made into super from July 1 this year. This effectively halves the amount that can be concessionally contributed (e.g. via salary sacrifice) to $25,000 for people under 50 with transitional arrangements for those over 50 continuing until 2012 but now capped at $50,000.