A little over a year after Parliament passed legislation to lift the Superannuation Guarantee to 12%, it is under threat.
In his Budget reply speech on 16 May, then Opposition leader Tony Abbott said that if elected he would delay the increase from 9% to 12% by two years.This would mean that many of the 8.4 million Australian workers with superannuation would have their retirement income cut.
Under last year’s legislation, compulsory superannuation contributions are meant to increase in steady steps from today’s 9% to 12% in 2019. This would see a person aged 30 today on average full-time earnings retiring with an extra $127,000 in their savings. The first 0.25% increase went ahead on 1 July. But under the Coalition's plans, it will stay at 9.25% until 2015 at the earliest. The same average 30-year-old would retire with $20,000 less in superannuation savings.
And the national pool of savings would be $45 billion lower, according to calculations by the Industry Super Network. The super industry says that delaying the increase in the SG was counter to the Coalition’s pledge to make “no unexpected adverse changes to superannuation” in its first term if it won the next election.
Tom Garcia, chief executive officer of the Australian Institute of Superannuation Trustees, said it even raised the prospect that it may not go ahead at all under a Coalition government. “We are very concerned that this announcement by the Coalition could be the thin end of the wedge – it brings into question their commitment to compulsory superannuation,” he said.
But it gets worse, because the Coalition has also said it would scrap the Low Income Superannuation Contribution, introduced last year, which allows people earning up to $37,000 to contribute $500 to their superannuation without paying tax. This would cut the retirement savings of almost 3.6 million workers, including 2.2 million women.
“Not content with his existing plan to increase superannuation taxes for 3.6 million workers, the Coalition is now attacking the retirement savings of every single Australian worker,” says ACTU Secretary Dave Oliver. “This will cost the average worker thousands in retirement."
“Given we have an ageing population, pulling money out of the super system is economic vandalism. Any political party that commits to pillaging from the pockets of the poor to benefit the rich is no friend of the worker. For most workers saving enough superannuation is the difference between retiring comfortably and finding themselves in financial strife, this after a lifetime of work.”
- Register here to keep updated with the latest super campaign news