Regardless of what you think about super, we should be concerned about politicians giving themselves the power to enact significant changes to major policy without adequate debate in parliament. Parliament exists for a very important reason: Checking the work of the government The Parliament scrutinises (closely examines) the work of the government in several ways, including: * examining bills, in chamber debates and parliamentary committees * analysing government decisions in major policy debates * participating in Senate estimates hearings three times a year, to investigate how the government has spent tax-payers' money * questioning the government each day at Question Time in both the House of Representatives and the Senate. http://www.peo.gov.au/learning/fact-sheets/parliament.html
Howard and Costello paused the rate at 9% for 11 years and that cost future retirees billions in lost compounded interest that they would have had if the rate had kept slowly increasing at the rate Keating originally set. I get the feeling that "sound economic management" isn't a political philosophy so much as regular corporate-speak: "Worry about next quarter's numbers, get your bonus and it'll be years before some other guy has to deal with the mess".
Why should it ever change? It's a percentage of salary. As salary rises (with inflation) so does the conributions.
Because putting aside less that 12% over the course of someone's working life won't leave them with enough money to fund their lifestyle in retirement. Inflation is irrelevant in this instance. The percentage was always supposed to increase gradually until it reached 12%. Whacking on a 12% increase in labor costs in one go wasn't never going to be feasible, so the system was designed to increase the rate by about 1% p.a. from inception in 1992/93 until it topped out at 12%.
Problem is it is not the workers who put the money into super its their employer and that is the crux of the matter. There are so many labor crooks on industry fund boards and the sweet heart enterprise agreements that give the wage slaves a Claytons choice ...union fund 1 or union fund 2. Is it any wonder why the unwashed are disconnected from their super ? CBUS is an excellent example, ex Victorian Premiere board member in the pocket of the CFMEU. CBUS wink wink nod nod that hands out personal names, addresses of workers who are not CFMEU union members and sends out a heavy to sign them up. And said ex Victorian premiere helping out Andrews so he and his CFMEU mates can trash the state treasury in the next term of office Kind Regards non recourse
I'd argue the point that 12% won't be enough for some to fund their lifestyle in retirement and 9% is too much for others. Here's an idea, how about abolishing superannuation and then pension? Each individual saves/invests a level decided by and relevant to their sovereign self.
+1, well said Petey. Superannuation is a tax on employers. It raises the cost of employing people, and is a disincentive to employ more workers. Without superannuation, for every 10 employees the employer could have 1 more. Let people plan for their own future, don't make employers pay for it. And in the case of pensions, scrap them and don't make future workers pay the price for people today not providing for their own future.
It should be remembered that when compulsory superannuation was first introduced at 3%, workers had to forgo a wage rise for it to be implemented. I don't remember if this was the case when it was increased from that time on. Therefore 3% is paid by the workers and the rest by the employer? Regards Errol 43
The foregone 3% pay increase was negotiated in order to get the scheme up and running, but subsequent pay rises have been lower than they otherwise would have been. Those lower rates of pay increases have also been negotiated, but not in the same context: centralised wage fixing ended was replaced by employer-union enterprise bargaining arrangements around the same time that super was introduced. Industry specific enterprise bargaining (generally) took into account that the employers were already making additional contributions towards the workers' welfare. So no, while the employer does pay the contributions, the workers have ended up giving up more than the initial 3%.
Anyone that's ever negotiated a package in the professional sector has probably seen how most employers treat super - part of remuneration. So a "$109,000" package is $100k plus super, but it is pitched as $109k to the employee. That was my experience anyway. Above numbers are just for illustration.
It should be remembered that before compulsory super was introduced individuals who had the foresight to contribute to their retirement were not taxed at all in the accumulation phase. When you retired and took your money out it was taxed at a maximum of 5% of your marginal rate and tops that worked out to be 2.5%. Keatings fairy tale that the labor party created super for the workers. The reality is what he did was tax super immediately at 15% of earnings where there was no tax and at least another 13.5% in retirement. Of course the other myth was that capital gains tax would collect a few tens of millions in the first year. In fact it was hundreds of millions. But they deregulated the banking sector you say.... Really? how many banks controlled 90% of the market in 1980 ? 4. How many control 90% of the market today? 4 Kind Regards non recourse
Rational reply. Watch how many "Aussie battlers" there are going to be on Today Tonight after having the government save 15% for them their whole lives. "I can't retire on this!"
When you use actual numbers, the difference between 12% and 9.5% on $75,000pa is less than $2,000 a year. Over 40 years working life even if you compound it I think that means maybe 3 years worth of funds in retirement (if you're lucky). If you are relying solely on employer contributions to fund retirement you will be in for a shock in retirement, unless your wage is enough to put the max in every year. It annoys the hell out of me that these things get the beat up in the media. Instead of focusing attention on this, how about pressure on government to reform the entire tax and reporting system so Australian small business has a chance of competing in a global marketplace.
NR my father sold superannuation schemes in the 1960s. Most common complaint was that they couldn't afford it - being that their disposable incomes were such that a retirement in 30 or 40 years was much less important than the latest labour saving device or caravan holiday. There was a major celebration at home when a business and its workers took up a scheme. The point of Keating's push was to ensure that the boomer generation wasn't going to overwhelm the social security system when all those people took up retirement. Of course if we'd all been taught at school about financial matters, compounded interest and the need to create your own superannuation scheme we'd be better off. But the old adage that half the population is less than average intelligence doesn't mean that they should be parked in suburbs that look like war zones with similarly damaged inhabitants, just because they're short sighted and too ignorant to realise the dream. Compulsory saving is a good idea because it means people take care of themselves and not climb on the gravy train of public service and political largesse that Thatcher so cleverly identified - 'the trouble is you run out of other people's money' Keating has had a word to say about the latest developments:
^^^^^^^ I have a real problem Jules.... with politicians and social scientists who want the productive minority to fund the unproductive majority. That is why the OCED countries are on a downward spiral. When I came to this country in early 1974 there was less than 2% of the population that were on social welfare and if you didn't work you were a bludger. Australia had had 30 years of conservative government and in 4 years the labor mugs put in train that entitlement mentality that the bosses should foot the bill. There is some justice though because all these people in my generation who pissed it up against the wall are discovering the fools gold that the labor mugs are handing out is a worthless promise. Kind Regards non recourse
I support the delay or scrapping of the increase. As the way I understand the way Gillard et al wrote the legislation, it allows employers to make the 'contributions' above 9% of income not in addition to income, but instead of income. My first 0.5% SGC increase is in lieu of income received. It would rise to 12% super being actually 9% employer contribution and 3% of my own salary received as superannuation rather than in my pocket. While I believe in the tax effectiveness of superannuation, I think I'd prefer that 3% of my salary in my own hands being put towards my PPOR.
