Industry Super Australia has released a four-point plan to put members and their future economic security at the front of any debates over superannuation policy during the forthcoming election.
To build member retirement’s saving ISA’s plan urges any future government to:
1. Bridge the gender super gap
2. Fix the $5 billion a year unpaid super scourge
3. Protect members from dud funds
4. And stop tinkering with super’s foundations
Australia’s $3.4 trillion super system has put a dignified retirement within grasp for millions of Australians, while playing a growing role in the national economy.
Members’ retirement savings are built on the policy foundations of super, these foundations – of compulsion, preservation until retirement and universality – need to be protected.
If millions of Australians are to have a dignified retirement the Super Guarantee increase to 12% must not be altered and further relaxation of existing rules for the early release of super should be ruled out.
The system is not perfect, too many women are still at risk of retiring into poverty, women retire with 30% less super than and the gender savings gap is forecast to last for at least the next four decades.
Not paying super on Commonwealth parental leave contributes to the gender savings gap, this has cost young mums $1.6 billion and will leave a mother of two $14,000 worse off at retirement. Super tax concessions are also poorly targeted and further entrench the gender super gap.
Almost three million Australians – about a quarter of the workforce – are not getting all the super they are entitled to. The $5 billion a year unpaid super scourge needs to be urgently addressed by mandating that super is paid at the same time as wages, not quarterly.
While the new Your Future, Your Super package has made important reforms that stop the proliferation of multiple super accounts and introduced an investment performance test, the test needs to be strengthened and expanded to include all products and funds, and the legislation should be amended to ensure workers don’t get lumped with a dud for decades.
ISA is seeking the following policy commitments from the major parties:
Ø Mandate employers pay their employees super with wages
Ø Pay super with the Commonwealth Parental Leave Pay Scheme
Ø Review distribution of tax concessions to ensure they help close the gender super gap
Ø Expand the APRA performance tests to include 10 years of historical fund performance on all fees and products.
Ø Ban workers from being stapled to a fund that does not pass the annual performance test
Ø Legislate super’s objective of generating income to provide workers with a dignified life in retirement
Ø Maintain the legislated schedule for increasing the super guarantee to 12% by 2025.
Ø Rule out relaxation of existing rules for early release of super, or allowing people to opt out of saving for their retirement.
Comments attributable to Industry Super Australia Chief Executive Bernie Dean:
“Any changes to policy must be driven by members’ financial intersts – nothing else.”
“Not everyone is getting the same deal. We need to make sure young mums are paid super when they take time off to raise children, get workers’ super paid with their wages and protect them from ending up stuck in a dud fund.”
“Workers and retirees just hate it when politicians go messing with super. Sticking with the foundations, like the plan to increase the super guarantee to 12% and preserving super for retirement will go a long to give people the certainty they crave.”