Super balances can’t be rebuilt if SG remains frozen

23 June 2020
| By Mike |
image
image
expand image

A key Parliamentary committee was told weeks ago that the scheduled rise in the superannuation guarantee (SG) to 12% would need to occur to help workers overcome the retirement income shortfall they were facing because they had accessed the Government’s hardship early release regime. 

Industry Super Australia (ISA) used answers to questions from the House of Representatives Standing Committee on economics to reinforce that lifting the SG would prove necessary to helping restore superannuation balances. 

It said a gradual and manageable increase in the SG had been locked into law for a long time and had “already faced delays and the detrimental impact on workers' retirement savings due to that has been considerable, it has provided businesses with a longer lead time to adjust and factor the law into their operations”. 

“Deepening the importance of this legislated gradual rise is the need to rebuild member balances particularly those reduced by accessing their super early under the government's temporary measures,” the ISA told the committee. 

It noted that, “significantly in the current context there is evidence that following the 1991 recession the rebound in economic growth and employment coincided with an incremental but steady increase in the SG”. 

The message to the parliamentary committee came as a precursor to ISA this week claiming some vocal coalition back-benchers were using the COVID-19 downturn as a cover for scrapping the SG timetable – something it said could see a couple on average wages lose between $150,000 and $200,000. 

The ISA said the back-benchers were not only out of touch with public sentiment, but out of step with the Prime Minister, Scott Morrison, the Treasurer, Josh Frydenberg and the Assistant Minister for Superannuation, Jane Hume, who had had “already publicly quashed their ideologically driven plans to cut Australian workers retirement savings”.  

“The MPs, who themselves receive more than 15% super, say that 9.5% is enough for the average Australian to fund a dignified retirement,” ISA said. “They use the specious argument that an increase comes at the expense of wages, despite recent historic evidence showing there is no equal drop in wages when the super guarantee increases. 

“It was the same argument used to freeze the Super Guarantee in 2014, but wages have mostly flatlined since then – underlining the falseness of their arguments.  

“The claim that because Australia is entering a recession that the Super Guarantee rate must be cut, doesn’t hold water either, as there is evidence that following the 1991 recession the rebound in economic growth and employment coincided with an incremental but steady increase in the SG – like what is planned now.”  

Read more about:

AUTHOR

Submitted by Steve on Fri, 07/17/2020 - 07:27

If Labor & ISA are so worried about building super contributions, why did the ISA propose during the last Federal election for Labor to reduce non-concessional contributions down to only $70,000 (from $100k)? Also, why is the ISA biased against women, with their proposal to do away with the $25,000 bring forward concessional contributions for members with under $500,000? Finally, why do they insist on a work test for 67 to 74 year olds? When they start backing off on logical retirement policy issues like that, then this Govt might take them seriously. Some of us have really good memories.

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 1 week ago
Kevin Gorman

Super director remuneration ...

10 months 2 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 2 weeks ago

The profit-to-member super funds are officially operating as a merged entity, set to serve over half a million members. ...

1 day 19 hours ago

Super Review announced 21 winners at the annual Super Fund of the Year Awards, including the recipient of the prestigious Fund of the Year Award....

2 days 10 hours ago

APRA data shows the CFMEU accounted for 28 per cent of super fund industrial contributions, with the shadow treasurer calling for a prompt investigation into the payments...

3 days 14 hours ago