Compulsory super rises hit pay packets
Hike to legislated superannuation payments should be scrapped to alleviate pressure on employers just trying to keep Australians in work, business experts say.
The Federal Government's legislated increase to compulsory super is due to come into effect on July 1 but intense debate - including calls for a delay - is expected in the coming months as the pandemic continues to take a financial toll.
The increase would see annual super payments rise from 9.5 per cent to 10 per cent in July, then up to 12 per cent by 2025.
Under the changes, super groups say it will cost employers $8 a week for an employee earning $80,000 a year from next July.
Council of Small Business Organisations Australia's chief executive officer Peter Strong said it should not go ahead.
"If super goes up that's a wage increase yet the people won't see the money," he said.
"Because they won't see an increase in take-home wages they won't spend it, therefore employers have an increase in costs without an increase in sales and must cut staff."
Mr Strong described the super system as "great" but said "it's time to have a complete review of it".
"There's too many vested interests in superannuation and we need to confront it," he said.
The recent Retirement Income Review found if compulsory super stayed at 9.5 per cent women would likely have $54,400 less come retirement, while men would have $88,400 less.
The Reserve Bank of Australia's governor Dr Philip Lowe said last year lifting compulsory super would result in reduced consumer spending and cost jobs.
''The evidence is that increases of this form do get offset by lower wage growth over time,'' he told a parliamentary hearing.
Federal Treasurer Josh Frydenberg has previously said any decision to delay the rise to compulsory super would be made at the federal budget in May.
But superannuation lobby group, Industry Super Australia's chief executive officer Bernie Dean, said workers shouldn't be "denied money that's been promised to them for a long time".
"This promise is six or seven years in the making and the Prime Minister wouldn't want to go down in history as the person who tapped people's super and at the same time his colleagues in parliament kept pocketing 15 per cent themselves," he said.
"People need those small incremental staged rises more than ever now."
Under existing legislation employers must pay workers 9.5 per cent of their salary into super, while politicians receive 15.4 per cent.
Under the Federal Government's early access to super scheme more than 3.03 million individuals had withdrawn $37.6 billion of their own money.
Mr Dean said, "they're going to need every bit of help they can get to recover that ground."
SUPER CHANGES COMING
• Compulsory super to rise to 12 per cent by 2025.
• Super funds to move with employees from July 1.
• An annual test will be done to view a fund's performance.
• A new comparison tool called YourSuper from July 1.
COMPULSORY SUPER INCREASES
July 1, 2021: Rise from 9.5 to 10 per cent.
July 1, 2022: 10.5 per cent.
July 1, 2023: 11 per cent.
July 1, 2024: 11.5 per cent.
July 1, 2025: 12 per cent.
Originally published as Compulsory super rises hit pay packets