First Super calls on government to rethink super delay

First Super has joined Industry Super Australia (ISA) in condemning the Federal Government’s decision to delay the increase in the superannuation guarantee (SG) from 9% to 12%.

Under changes announced on September 2, the Federal Government will delay the increase from its original expected start date of 2019-20 to 2025-26.

The government has defended its decision, claiming it will leave more money in the pockets of Australia.

However, First Super, and ISA, the voice of Australia’s industry superannuation funds, have dismissed the suggestion the delay will “benefit” workers.

ISA figures released on September 3 estimated a 25-year old average income earner would be $100,000 worse off over their working life as a result of the delay, taking into account compound interest.

ISA chief executive David Whiteley said the decision was “about a short-term budget fix that will have long-term budget impacts on age pension outlays”.

“Industry Super Australia (ISA) is dismayed at a short sighted deal in the Senate today that will mean that millions of Australians retire with tens of thousands of dollars less in their superannuation accounts,” Whitely said.

The delay in the increase was reached in an agreement with the Palmer United Party and some other crossbench Senators as part of the repeal of the mining tax.

Under the deal the low income-earners super contribution (LISC) will also be abandoned on June 30, 2017.

Whitely said the economic implications of the superannuation changes were significant. Taken together, national savings will be hit by a staggering $150 billion by 2025, he said.

“ISA has consistently sought a bi-partisan approach from policy makers on retirement incomes policy. The scrapping of the LISC is plainly unfair. Over three million workers – two million of whom are women – will lose $500 per annum as a result of this change. These decisions will bewilder superannuation fund members and can only reduce confidence in the super system”.

Unions, meantime, have promised to claw back the superannuation increases by locking them into enterprise bargaining agreements.

ACTU Secretary Dave Oliver said unions will be fighting to get clauses into all new agreements covering more than 4 million Australian workers.

“We’ll also be seeking commitments from employers whose workers have already entered into enterprise agreements in good faith by taking into account the super guarantee increase when negotiating the wage package.”

Mr Oliver said that when negotiating workplace agreements, superannuation is a given and

“Increasing the super guarantee is particularly important for low to middle income earners, especially women whose careers were interrupted while they were raising children.

“It would have delivered greater financial security for workers, addressed the problems of an ageing population, and supported the economy with investment in national infrastructure and jobs”.

 

Disclaimer:

The content in this newsletter is accurate and reliable as at February 2015. This information is of general nature only and does not take into account your personal circumstances or situation. We recommend that you seek qualified financial advice before making any investment decision. This newsletter is provided by First Super Pty Ltd ABN 42 053 498 472, AFSL No. 223988, as the Trustee of First Super ABN 56 286 625 181. If you intent to invest or hold this product, you should obtain and consider a copy of the Product Disclosure Statement which is available by calling 1300 360 988.