An opinion piece by Greg Combet, as published in the Herald Sun, Thursday 20 February 2020
SUPERANNUATION is not front of mind for most Australians.
Many are focused on their day to day lives, providing for themselves and their families.
They expect the super system will do the right thing and grow their nest eggs, without them having to think about it.
So in a lot of ways independent research by UMR that shows only 32 per cent of Australians can correctly identify the super guarantee rate of 9.5 per cent – that is the minimum amount of super a worker must get on top of their wages – is unsurprising. Even fewer, about one in 10, know the rate is legislated to go up – to 12 per cent. Less than 10 per cent can correctly identify both the current rate and what it is scheduled to increase to.
At the same time there persists an anxiety among Australians that they will not have enough money when they retire – only 20 per cent expect to live comfortably off their super.
So this already-legislated increase to the super rate is a big deal to many Australians, even if they don’t know it yet.
The extra money flowing into their super account can be the difference of a dignified retirement of their choosing – where the occasional dinner out is not a stretch – to one just scraping by on the government pension.
The Prime Minister, Treasurer, Finance Minister and Assistant Minister for Superannuation have all publicly committed to keeping the scheduled increase to 12 per cent – and we welcome that commitment. So Australians can get maximum value out of this extra super coming their way, Industry Super Australia has embarked on an awareness campaign in support of this settled government policy.
The ads will be seen on TVs, mobile phones and outdoor billboards for the next six months, to raise awareness among Australians of how valuable this super rate rise will be.
Industry Super Australia modelling shows a 30-year-old worker on an average wage would stand to gain more than $85,000 in extra super by the time they retire. As super system leaders it is our duty to tell our members about the positive impact this policy would have on their retirement.
This campaign may also prompt Industry Super Funds members and all Australians to think about their super. The more engaged members are, the better off their balance is – because they’re more likely to consider whether they’re in a good performing fund, whether they have multiple accounts which are being eroded by multiple fees and whether or not they’re getting the full entitlement paid by their employer.
There’s always going to be debate about the right time and rate to set the Super Guarantee at – its very concept was fiercely opposed when Paul Keating introduced it in 1992. Some are even suggesting a government review examining Australia’s retirement income system should consider the schedule, despite the Prime Minister and senior economic ministers backing the rise about a dozen times in the past year.
But Australians cannot afford another delay. They are sick of the government tinkering with super.
Previous delays to the super rate rise have already cost the average worker $100,000 from their nest egg. Think about what that money could have meant to someone approaching retirement. Any further delays would deprive workers the chance to lead the dignified retirement of their choosing.
There are those who claim dumping or delaying the increase would lead to an increase in wages.
This argument should be immediately dismissed as the nonsense it is. It defies reason and real-life experience. It is also not borne out by recent economic history. In the last 10 years or so wage growth has been anaemic and the super rate has risen just a quarter of a per cent. Increasing the super rate guarantees workers get rewarded for their hard work with a lift in their retirement savings.
Australia’s universal superannuation system is one of our greatest success stories.After more than 25 years, we are seeing the truly transformative benefits it has had on not just the lives of working Australians but the broader economy.
We now have an entire generation retiring with the benefit of decades of compulsory superannuation, delivering them dignity in retirement and helping to ease some of the burden on the pension.
Rewind 30 years ago, millions of Australians were retiring with little to no savings, no super and only the meagre age pension and other government concessions to support them.
Now, we want more Australians to be engaged in their super to ensure the super guarantee is delivering the level of support they need for a comfortable retirement. A retirement that Australians feel in control of their finances and can maximise the benefits of the bipartisan promise to increase the super rate to 12 per cent.
GREG COMBET IS CHAIR OF INDUSTRY SUPER AUSTRALIA