Reasons the super guarantee rate should not climb above 12 per cent
Lifting compulsory superannuation to 15 per cent might seem like a good way to boost Aussies’ nest eggs, but the plan also has serious problems.
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Hiking the superannuation guarantee rate to 15 per cent of employees’ earnings is absurd.
And it’s no surprise that it was the peak union mob representing workers – the ACTU – pushing for it in their submission to the Federal Government’s review into retirement income.
Let’s not forget who the ACTU represent – trade unions – who are heavily linked to industry super funds.
Lifting the superannuation guarantee (SG) rate to 15 per cent will not only hurt businesses that have to find this extra cash but it will also hurt workers, who will forgo any notable pay rises in the not too distant future.
The SG rate is legislated to climb in increments from 9.5 per cent up to 12 per cent by 2025.
But raising it to 15 per cent is unfeasible.
While the increases will fatten many Australians’ retirement savings, they would also line the pockets of more super fat cats who get a nice slice of the pie from hard and honest workers.
Understanding super fees is confusing and many Australians are so disengaged with their retirement savings they would be unsure if they are being fleeced or not.
Most Australians haven’t seen a wage increase in years and are unlikely to receive one anytime soon.
With the scheduled increase to the SG rate rising next year from 9.5 per cent to 10 per cent, it’s highly unlikely workers will get an increase in their take-home pay packets.
Instead any additional cash they receive – depending on their employment contract – will be tipped into their super accounts.
Hiking super comes at a time when we have households with some of the highest levels of debt in the world – behind Switzerland – and soaring costs of living.
Mums and dads are struggling to cope with their everyday expenses including power bills, childcare and school costs, petrol, rent and mortgages to name a few, and yet we have the harebrained idea to take even more of their hard-earned money and siphon it off for retirement.
And again, I’m talking about the idea to tip in 15 per cent.
Think tank the Grattan Institute said increasing the SG rate would simply lower living standards while a person was working and squeeze them until they reach retirement.
If super jumps to 15 per cent, I’m pretty confident most employers won’t be increasing take-home salaries with that.
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Their super will go up but their take-home pay won’t.
I scrolled through my super statements the other day and my monthly administration fee has climbed by 25 per cent in the past few months, from $9 to $11.25.
And my fund has also announced a new “variable fee” of up to 0.04 per cent in addition to existing fees.
These fees might seem small but when it impacts millions of customers it’s not small at all.
Rising to 12 per cent is enough. Let’s leave it at that.