ASFA calls for release of super report

Delaying the release of the report was ‘undermining confidence in the retirement system’.

Any freeze on the current superannuation guarantee levels would be likely to fall harder on women and lower income earners.

The Association of Superannuation Funds of Australia has called on the federal government to release the 600-page Retirement Incomes Review, warning that delaying the release of the report was “undermining confidence in the retirement system”.

In a letter to the federal Treasurer Josh Frydenberg, ASFA chief executive Martin Fahy has called for the release of the review by former Treasury official Mike Callaghan which was handed to the government in late July.

The Association is concerned that the delayed release of the report is fuelling uncertainty in the industry, with its content potentially being used by some anti-super groups to argue in favour of delaying or scrapping plans to increase the compulsory superannuation guarantee levels from July 1.

The Morrison government has been hinting in recent days that it could look to seek to delay the legislated increase in the super guarantee set for next July from 9.5 per cent to 10 per cent, using concerns that it could harm economy recovery and stifle wage increases.

The review was announced by the Morrison government after the May 2019 election.

Reform of the super system

While it does not contain any recommendations, it is believed to outline a number of scenarios for reform of the super system.

But the delay in releasing the report has led to speculation that the government could use its apparent findings to justify plans to delay the SG increase which will need to be reversed by a vote of parliament.

Mr Fahy called on the government to table the report in the next sitting of federal parliament which is due to resume next week.

He said speculation about the report had intensified in recent days which was “creating uncertainty around the future of the superannuation system and superannuation’s ability to help ensure Australians have a dignified retirement”.

“We consider it is important that there is due public consideration of the content of the report and the mistruths that some anti-retirement groups are generating,” he said in the letter.

“We are conscious that the COVID-19 pandemic has drastically changed the way in which the government will view the report,” he said in the letter.

“A thorough consideration of how the COVID-19 pandemic will impact on the future of Australia’s retirement system, as well as the broader themes of the report, will require time for deep consideration.”

“Public debate and the establishment of a parliamentary committee to explore the report will ensure this important report is given the public consideration it needs, as well as complete transparency of the report’s findings,” Mr Fahy said in his letter.

The letter comes amid increasing concerns by the superannuation industry that the government will repeat its past moves to delay the proposed increases in the super guarantee to 12 per cent by 2025.

On the backfoot

The superannuation industry has been on the backfoot for most of the year, with the federal government ignoring its pleas with the onset of the pandemic not to allow people to draw down their superannuation savings by announcing the early release scheme.

The scheme, which initially allowed people to withdraw $10,000 in the months until the end of June and another $10,000 until September was recently extended until the end of the year, a move which has put further pressure on the super industry and allow further draw downs which could see more than $40bn flow out of the super system this year.

In an interview with the Australian earlier this week, Mr Fahy said it was “breathtaking” that people were arguing that the legislated 0.5 per cent increase in the super guarantee next July was a threat to economic recovery.

“With unemployment heading to 10 per cent, naysayers have sought to use the worsening economic outlook to call for delays in the legislated move to 12 per cent compulsory superannuation,” he said.

“Critics seem to be suggesting that stopping the planned less than $1 a day increase in the superannuation guarantee for low income workers will somehow lift real wages and fix the pervasive levels of unemployment,” he said.

The Prime Minister Mr Morrison said last Friday that the government might need to take into account the COVID-19 crisis when considering its pledge to go ahead with the increase in the superannuation guarantee from the current 9.5 per cent in increments from July next year, reaching 12 per cent by 2025.

In an interview with ABC radio on Monday morning, the Assistant Minister for Superannuation Senator Jane Hume said she said was “reasonably ambivalent” about whether it should go ahead.

“This is a decision that really should be based on the circumstances at the time,” she said.

She said it would be “irresponsible” for the federal government not to consider concerns that the proposed increase in the super guarantee could be seen as a trade off for lower wage growth.

Continued erosion

“It is the government’s responsibility to make sure we can persuade the public that the trade off is the right one to make,” she said.

In his interview with the Australian, Mr Fahy said the continued erosion of superannuation, which has already seen an outflow of some $30 billion as a result of the early access program, would lead to more incidences of “despair” in retirement as the current generation of employees finished their working lives with lower levels of superannuation.

“There are a million young people under the age of 35 who are likely to be out of work in the next year, who have exhausted their superannuation balances and are going to be relying on social welfare, who are not going to get a wage increase or a superannuation increase who will most likely end up on the age pension,” he said.

He said any freeze on the current superannuation guarantee levels would fall harder on women, lower income earners and people with broken work patterns.

Mr Fahy said the there seemed to be a “focus on superannuation almost exclusively of any other” policy lever to help respond to the economic impact of the pandemic.

He said the superannuation industry would become “very vocal” in its defence of superannuation over the next few weeks “against critics who are trying to exploit the current crisis to derail what is recognised as one of the most outstanding pieces of public policy in Australia over the last 30 years.”

“We need to recognise that compulsory superannuation is the only way to avoid ‘retirements of despair’, particularly for low income workers,” he said.