The Budget decision to boost the Federal Government’s co-contribution scheme for superannuation has been welcomed by the industry.

From 2004/05 the Government will co-contribute $1.50 for every $1 of personal contributions for individuals earning up to $28,000 a year.

Above this, the maximum co-contribution will be cut by 5 cents for every $1 of income and phase out completely at $58,000. The superannuation surcharge rate will also fall from the current 14.5% to 12.5% in 2004/05, 10% in 2005/06 and 7.5% for 2006/07 onwards.

The incentive will cost $2.1 billion over the next four years, $610 million more than original Budget estimates.

The Investment and Financial Services Association says the Budget will provide a major boost to long-term savings.

“The Government’s decision to further scale back the superannuation surcharge is a very welcome measure,” CEO Richard Gilbert said. “The increased co-contribution amount from $1 to $1.50 is a very significant outcome, with major implications for improving the retirement savings prospects of working Australians.”