Changes announced in the May Federal Budget have suddenly made superannuation considerably more attractive as a remuneration option for both employers and their staff.

According to Neil Cassidy, General Manager of Tasplan, the largest industry super fund in Tasmania, the Budget proposals have dramatically improved the appeal of superannuation to ordinary Australians.

"Employees are likely to be far more receptive to the use of superannuation in negotiations about salary as a result of the Government's decision to abolish the taxation of benefits on retirement after age 60". Cassidy said.

"Super is a tax effective option which has been made more attractive by the recent abolition of the superannuation surcharge and the reduced taxation and increased flexibility which will flow from the Budget announcements.

Super as an employment benefit is now also more attractive to business. The options for employers are many:

• a one off additional payment to super for achieving targets
• a bonus for outstanding performance
• an addition to the SG contribution of 9% in lieu of a salary increase

For an employer, a one off additional contribution to super at the end of a profitable year may be preferable as a reward or bonus because a salary increase has implications beyond that particular period:

• it must be paid even in a bad year for the business
• increased salary means increased labour on-costs including workers compensation, annual leave, leave loading, sick pay, payroll tax etc.

According to Cassidy, another reason that super is more attractive to employers is that there aren't the Fringe Benefit costs associated with other non-cash benefits.

Superannuation had been a prominent feature of salary packaging up until the mid 1980's when the introduction of a compulsory productivity super payment took the gloss off super and seemed to created some resentment amongst employers who had until then used it as a reward for longevity or outstanding performance.

The Federal Budget announcements will serve to bring superannuation back into the mainstream as a preferred form of remuneration for both employees and employers.