Many workers don’t bother thinking about their superannuation savings but that doesn’t mean they don’t want it. A new study shows what they want.
Young adults and low-income earners have a clear message for those wanting to fiddle with Australia’s retirement saving rules: Leave our super alone.
Amid calls by some politicians to halt the rise of compulsory superannuation and let low-income workers take their super as extra income instead, a new survey suggests employees are savvier than many might think.
Only one quarter would rather have the money now than in their super, according to the Essential Research survey commissioned by the Australian Institute of Superannuation Trustees.
And just one in 10 disagree with the government policy of lifting compulsory employer super payments to 12 per cent of wages by 2025.
The current rate of 9.5 per cent is set to rise to 10 per cent in July 2021.
Steve Greatrex, principal of Wealth On TrackSource:Supplied
Australian Institute of Superannuation Trustees CEO Eva Scheerlinck.Source:Supplied
Independent think tank the Grattan Institute is against lifting the super guarantee to 12 per cent, as is a group of Coalition politicians.
And Liberal senator Andrew Bragg wants super to be voluntary for workers earning less than $50,000 and to allow their employer contributions to be refunded.
The Federal Government says it has no plans to change the 12 per cent target.
However, all facets of super are likely to be examined in the retirement income review currently under way.
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Australian Institute of Superannuation Trustees CEO Eva Scheerlinck said the survey suggested a significant number of young workers and low-income earners were worried about having enough money in retirement.
“There is no justification for excluding any worker from benefiting from 12 per cent super, but it is particularly important for people on low incomes, those working part-time or those who have taken time out of paid work as carers,” she said.
The age pension currently pays a maximum of $933.40 per fortnight to a single or $1407 a fortnight to a couple.
Every $5000 someone has in superannuation is enough to boost their retirement income by $200 a fortnight for a year.
Ms Scheerlinck said people were unconvinced by claims that freezing compulsory super would deliver them a pay rise.
“It is farcical to assume, as some MPs have suggested, that workers will receive a pay rise if the SG is frozen,” she said.
Wealth on Track principal Steve Greatrex said putting a lid on super rises so employers could pay higher wages was “impractical”.
“The truth is a lot of employers won’t pay them more,” he said.
“At least if it’s in the superannuation system people have rights.”
Mr Greatrex said low-income workers needed super to improve their retirement just as much as others.
“We are a wealthy country and it’s a good way of sharing the wealth around more evenly,” he said.
Super fund fees have been under fire for being among the highest in the world, but Mr Greatrex said there was pressure from regulators to cut costs for members.
“We read about high-fee funds, but there’s a lot of funds out there that are competitive,” he said.