Retirement
Funds, ministers clash over 15% super rate target
Three of Australia’s largest superannuation funds have been questioned by a parliamentary committee on the rate of superannuation, with a majority expressing strong backing for meeting the 15 per cent SG target.
Funds, ministers clash over 15% super rate target
Three of Australia’s largest superannuation funds have been questioned by a parliamentary committee on the rate of superannuation, with a majority expressing strong backing for meeting the 15 per cent SG target.
During the latest debate on superannuation, AustralianSuper chief executive Ian Silk and Cbus chief executive Justin Arter fronted a House of Representatives committee, where both were asked to give their verdict on the rate of superannuation contributions and the trade-off with wages.
When asked whether the rate of superannuation should be at 15 per cent, Mr Arter explained, “fifteen per cent was the original design when [super] was set up.”
“One of the reasons we argue that 15 per cent would be better is because the average balance of our members is quite modest, retiring with about $137,000.
“So, we absolutely support the increase to 12 per cent, and if the government were minded to go to 15 per cent to enhance the retirement outcomes of members, so much the better,” Mr Arter said.
Pushed further by Liberal MP Tim Wilson, Mr Arter said that 15 per cent would lead to better retirement outcomes for members.
However, Mr Wilson and Mr Arter clashed over where the funds would come from, with the Cbus chief executive quashing the minister's claims that a lift in the super guarantee comes at the expense of workers’ wages.
“I don’t accept those observations, chair. You’ve seen no doubt, like I have, a plethora of economic arguments to argue both sides, and you’ll note with the recent increase there hasn’t been a fall in wages,” Mr Arter said.
Mr Wilson retorted, “that’s not true, there’s absolutely people who have had reduction in wages, including people under certain contract arrangements.”
Next up was Mr Silk who, when asked about the changing rate, highlighted the battle with ministers to get the increase from 9.5 to 10 per cent, which came into effect on 1 July this year.
“Our view is that if and when we get to 12 per cent, that will be a great achievement and will be a monumental task to go from 9 to 12,” he said.
Following further questioning, Mr Silk said he would review things once the rate gets to 12 per cent.
“We have a major challenge to get to 12,” he continued.
The second segment of the House of Representatives hearing saw Aware Super CEO Deanne Stewart face a similar grilling about the rate of superannuation.
Ms Stewart, however, was less bullish about increasing the rate, but also supported a higher rate long-term.
“I have to say we haven’t spoken about the 15 per cent,” she said.
“Ultimately, that would help increase our members’ retirement savings. But we have been focused on the 12 per cent that has been legislated.
“In fact, for our type of members, it’s likely to increase their retirement savings by $80,00 to $100,000,” Ms Stewart concluded.
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