Budget 2021: Door left ajar for a super rise rethink

Josh Frydenberg has left the door open to revisiting changes to the superannuation guarantee, refusing to embrace the legislated contribution increases that will reach 12 per cent of wages by 2025.

Josh Frydenberg has left the door open to revisiting changes to the superannuation guarantee, refusing to embrace the legislated contribution increases that will reach 12 per cent of wages by 2025.

The Treasurer said the government “didn’t announce changes” to the superannuation guarantee after he was asked whether it was Coalition policy to embrace the 12 per cent rate.

The government controversially refused to pause the rise in the superannuation guarantee — due to increase to 10 per cent this year — despite a push by government backbenchers, business groups and economists to keep the rate at 9.5 per cent.

“Our position has remained consistent, that these are legislated increases,” Mr Frydenberg said. “The Grattan Institute and also the Reserve Bank and others had commented about the adequacy of retirement incomes with a 9.5 per cent superannuation guarantee. And so that debate was happening independent of government.

“That debate was also kicked along by the Callaghan report into retirement incomes, which found that increasingly people are bequeathing quite a large sum of money at the end of their lives, having accumulated it through their lives. And so there was — and is — a real issue about the ­adequacy of retirement incomes, whether it’s at 9.5, 10 per cent or even a higher rate.

“Our position remains consistent, that it is legislated and we didn’t announce changes.”

While the budget did not push for changes to the superannuation guarantee, there were changes to the sector.

People aged older than 60 will be able to pay $300,000 into their superannuation accounts from the sale of their homes in a con­cession that will encourage “downsizing’’ among retirees to free up housing stock for younger families.

Other changes include the removal of the $450 a month minimum income threshold for the superannuation guarantee, which will let people earning below $450 a month get employer superannuation contributions.

In August last year, Scott Morrison said he would consider pausing the increase of the superannuation guarantee because of concerns it could impact the economic recovery following the COVID-19 pandemic.

“It is the circumstances that has occurred since the election which has made that the case … prior to the election, it was certainly my view … those were legislated changes and increases, and we had no plans to change any of those and that was certainly our view,” the Prime Minister said.

“COVID-19 has occurred.

“People’s jobs are at risk.”