Liberal committee chair backs 10% compulsory superannuation freeze   


Sydney Morning Herald
October 11, 2019

 

The chair of the parliamentary committee on financial services has backed stalling the legislated super increase at 10 per cent after it was revealed Superannuation Minister Jane Hume described the mark as a "milestone" and a "nice round number" in private meetings with the industry.

Coalition senator James Paterson said all the evidence so far indicated increased mandatory super contributions reduced workers' take-home pay.


"In that light, 10 per cent would definitely be preferable to 12," he told The Sydney Morning Herald and The Age.

The levy is legislated to rise from its current level of 9.5 per cent to 10 per cent in 2021, then to 12 per cent by 2025, an increase that will boost retirement savings by an estimated $15 billion each year.


Senator Paterson's comments come ahead of the launch of the first retirement income review in 30 years.

The major super funds will also be asked to testify for the first time before the House Committee in November in the lead up to the politically charged probe. The review is being used by some members of the Coalition to argue for a stall in the legislated increase, which is due to come in just before the next election.


Report recommends changes to superannuation system



Australians could be more than half-a-million dollars richer in retirement under the biggest shakeup of the compulsory superannuation system.

Half a dozen Coalition members believe historically low levels of wage growth means workers need more money now rather than saving for retirement.

Research by the Grattan Institute claims that workers would be $30,000 worse off in lost wages if the increase in compulsory super went ahead. This has been challenged by Industry Super which on Thursday released research by two former Treasury officials that shows a median worker will have an $18,100 boost in lifetime income through the increase.

On Friday, a group backed by the former chair of the Productivity Commission, Peter Harris, will also call for the inquiry to examine reverse mortgaging as part of a suite of measures to boost super balances.
Related Article
Shadow treasurer Jim Chalmers will on Thursday use a speech to vow to stick to the legislated increases in the superannuation guarantee levy.
Superannuation
Retirement income review a 'stalking horse': Labor vows to hold on to 12% super

The World Economic Forum found in June the average Australian will run out of retirement savings 10 years before they die at the current compulsory superannuation rate of 9.5 per cent, forcing them onto the pension and increasing the tax burden for younger generations.

Household Capital, which has been targeting an expansion of the home equity sector and is backed by Mr Harris and former superannuation minister Nick Sherry, has called for the review to focus on how retirees can better access the capital locked away in their homes.

"Baby Boomers don't have enough in super and people who are retiring now need more help," said Household Capital managing director Joshua Funder.

"The terms of reference show home equity is now considered by the government to be part of the pillars of retirement funding. There is a very big light at the end of this tunnel."

'A nice round number': 10% super a 'milestone' but won't lead to a freeze, Minister says

Senior figures within the industry have described the move to draw down on mortgages as "inevitable". That transition is likely to be accelerated if the compulsory superannuation rise is stalled after reaching 10 per cent in 2021.

After being asked on Wednesday about her comments at a private meeting with superannuation chiefs at the Australian Tax Office, Senator Hume said her promotion of the 10 per cent mark should not be taken as an intention to stall the increase but was an opportunity to raise superannuation financial literacy.

Association of Superannuation Funds of Australia chief executive Martin Fahy said the review was the time for "a debate we need to have".

"What is our aspiration for retirement in this country? Is it the poverty-driven retirement of grandparents or is it a world-class well-funded system," he said.

The inquiry is due to hand down its finding by mid-2020.

Shadow treasurer Jim Chalmers will on Thursday use a speech to vow to stick to the legislated increases in the superannuation guarantee levy. Labor vows to hold on to 12% super.   

juliar wrote on Oct 11^th, 2019 at 2:41pm:




Leave WhiteKnight alone -

he stands up for the poor and downtrodden.

10% is such a nice round number - Liberal Idiot.

Fair dinkum - where do you guys get your never ending supply of nasty imbeciles ?

What is missed is that superannuation is actually compulsory saving. If we bumped it up to 15 percent Australia would become the richest country in the world per capita.

Bam wrote on Oct 11^th, 2019 at 8:57pm:


No not almost all - all of it.

The only 0.5% to go up under the Liberals was Legislated by Labor and the Abbott government as hard as they tried could not stop it going through.

The Liberals have never ever initiated a super guarantee increase and never will. Even the currently scheduled increase was legislated under a Labor government.

Increase in Super percentage is a bad idea. The government needs to look after the complete population on the basis of Pension Payments and exception payments (Social Support). A Mandatory retirement saving is OK. A solution which makes you loose sight of the Government role in Age Care, is only harm!!

Now the Industry super Funds that keep the corrupt unions afloat come under scrutiny.


If the unions could not pilfer from Industry Super funds they would be BROKE!!!!



Industry funds spew compulsory superannuation lies
By Unconventional Economist in Featured Article, Superannuationat 3:00 pm on October 2, 2019 | 36 comments

The superannuation industry continues to white-ant the announced retirement incomes review, claiming that abandoning the legislated increase in the superannuation guarantee (compulsory superannuation) would raise our taxes:

“There’s two significant debates going on. The first is whether super should be compulsory or optional, and the second is whether the [amount of super] that employers pay on top of your wages should be frozen,” [Industry Super Australia (ISA) chief executive Bernie Dean] said.

“Both of those are bad ideas. Winding back compulsory super would leave the whole country worse off, as we’d all end up paying more tax to support a flood of people fully relying on the pension.”

Employers are currently required to contribute 9.5 per cent of an employee’s salary into their superannuation fund – but current legislation will see that figure (known as the superannuation guarantee) increase 0.5 per cent a year from 2021 until 2025.

This claim is unambiguously false. In addition to lowering workers’ take-home pay, since the superannuation guarantee is paid for by workers via lower wages, compulsory superannuation tax concessions also cost the federal budget more than they save in Aged Pension costs.

This was made clear by the Henry Tax Review, which explicitly stated:

“An increase in the superannuation guarantee would … have a net cost to government revenue even over the long term (that is, the loss of income tax revenue would not be replaced fully by an increase in superannuation tax collections or a reduction in Age Pension costs).”

Accordingly, the Henry Tax Review explicitly recommended against raising the superannuation guarantee, also because it would lower workers’ take home pay and have a particularly adverse impact on lower-income earners:

“Although employers are required to make superannuation guarantee contributions, employees bear the cost of these contributions through lower wage growth. This means the increase in the employee’s retirement income is achieved by reducing their standard of living before retirement…

The retirement income report recommended that the superannuation guarantee rate remain at 9 per cent. In coming to this recommendation the Review took into the account the effect that the superannuation guarantee has on the pre-retirement income of low-income earners”.

The Grattan Institute has come to similar conclusions:



Even slower wage growth will be the result of increasing compulsory superannuation contributions from 9.5 per cent to 12 per cent…



[Moreover] both the short and long term, superannuation tax breaks cost the budget more than they save in pension payments:



The reason why raising the superannuation guarantee would be so ineffective can be explained by Australia’s flat 15% tax on contributions and earnings. This ensures that those workers on lower incomes receive minimal concessions (or are penalised), whereas those on higher incomes receive the biggest tax concessions on contributions:





https://www.macrobusiness.com.au/2019/10/industry-funds-spew-compulsory-superann...