The Federal Government is apparently dropping its potential opposition to increasing the contribution our employers make to our super accounts.
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Maybe it’s the political climate.
Maybe it’s a government that is trying to fight on fewer fronts.
I like to think it’s because they’ve seen the light.
In any case, assuming it’s true, the news in today’s papers is good for every single working Australian.
That news, if you haven’t caught up yet, is that the Federal Government is apparently dropping its potential opposition to increasing the Superannuation Guarantee (SG) levy (that is, the contribution our employers make to our Super accounts).
The SG is currently 9.5% of our take-home pay, a level we reached back in 2015.
The current legislation has it going to 10% from July 1 this year, then increasing by 0.5% per year, between now and 2025.
But some government backbenchers had been agitating for the increase to be cancelled or delayed.
They’d also been arguing for us to be allowed to raid our retirement (sorry, ‘utilise our super balances’) for things like housing.
Because you know what house prices need? More stimulus from more money chasing the same housing stock…
But I digress.
Super shouldn’t be — isn’t — a lump sum to be pilfered every time someone has a brilliant idea.
It’s not there to pay for housing.
It’s not there to replace the social safety net.
It’s not there for infrastructure building.
Say it with me: Super is for retirement.
Assuming the reports in today’s media are true, and the government doesn’t lose its nerve in the meantime, the SG will finally increase to 10% of salary.
And, hopefully, continue on from there, to 12%, without delay.
Why is that important?
Because that’s the level that most people agree is (roughly) required to ensure a comfortable retirement.
Yes, there’s an argument about what standard of living we should assume, as well as what contributions are made, and what earnings rate we should assume on those retirement savings.
But most people agree that 12% is a pretty decent level.
It allows lower income workers to amass a decent nest egg.
It allows people who take career breaks (think: caring for kids or parents) to do the same.
Of course any blanket rule is imperfect for a dozen reasons.
But it seems, to me at least, that 12% is a pretty good point at which to peg our Superannuation system.
And for the federal budget, which otherwise needs to carry the can on supporting retirees.
Now, I should say that I’d make other changes, too.
Super shouldn’t just be a tax minimisation scheme.
It shouldn’t be able to be splurged, in retirement, before falling back on the pension.
And it shouldn’t unduly undermine the tax system, thanks to its 0% tax rate on earnings — no matter how high — in pension phase.
Those are problems to be addressed.
But they shouldn’t be addressed by limiting contributions, especially for lower- and middle-income earners who aren’t the ones actually causing those problems.
And, thankfully, it seems they won’t be.
At least not this time around.
We’ll see whether that’s what happens.
And, by rights, hopefully we won’t be back here again in 12 months’ time.
(I wouldn’t bet on it, but a bloke can hope, right?)
For now, I’m chalking it up as, as my father would say ‘one for the good guys’.
An acceptance that Super matters and that, as a cog in our financial system, it’s pretty much world’s-best, and something we should celebrate, rather than dismantle.
We’ll keep an eye on it, though.
Just in case.
And we’ll keep campaigning for the steady rise from 9.5% now to 12% by 2025.
Thank you to those of you who shared our message.
We all made our voices heard!
We’ll keep fighting, too.
And our message will be simple:
— Australians deserve a 12% Superannuation Guarantee
— Super is for retirement, not a piggy bank to be raided whenever special interests want to
In other words, #HandsOffSuper
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