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Hyperbolic discounting being used to increase contributions
Putting further weight behind hyperbolic discounting, which says that people value their current selves more than their future selves, being better utilised to increase super contributions, Vision Super’s ‘Save more later’ program is seeing growing interest from local governments.
The program was first approved in an enterprise agreement by Fair Work in October last year, for the Mount Alexander Council Shire. Since then, three further councils and Goulburn Valley Water have had the program approved, two councils are awaiting approval from Fair Work, and seven are negotiating new agreements which would include the program.
Under ‘Save more later’, employees would agree to sacrifice money from future pay rises into their superannuation, based on the above behavioural economics concept holding true.
Swan Hill Rural City Council chief executive, John McLinden, said that the organisation’s new enterprise agreement would see the employer superannuation contribution from the council increasing from 9.5 to 11 per cent over three years. Since the ‘Save more later’ program was introduced last year, 80 per cent of Vision Super employees at the council had stayed in the program.
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