Retirement
Hume fails to provide clarity on superannuation rate
2021 is shaping up to be a big year in superannuation reforms, with the government looking to plug holes in the superannuation system, but a key minister has failed to provide any clarity on what the rate of superannuation could be in the future.
Hume fails to provide clarity on superannuation rate
2021 is shaping up to be a big year in superannuation reforms, with the government looking to plug holes in the superannuation system, but a key minister has failed to provide any clarity on what the rate of superannuation could be in the future.
Speaking at a media event on Thursday, 28 January, Minister for Superannuation, Financial Services and the Digital Economy Jane Hume said the government is currently debating the rate of superannuation, despite reforms already being regulated.
Ms Hume was asked whether the SG rise was going ahead, to which Hume replied with “the superannuation guarantee rise is legislated for 1 July”.
“But the debate we’re having now is about what that trade-off for that is.”
“The SG is a cost to employment, and if I’m an employer and I give a rise to the SG, it’s going to be passed on to employees one way shape or form. They know that somewhere between 80 to 100 per cent is going to be passed on so deny that is sticking your head in the sand quite frankly,” she said.
She highlighted that the government wants to support businesses throughout the COVID-19 pandemic, with a rise in superannuation impacting wage growth.
“Everything this government does is about trying to lower the cost to business to employ more people and to encourage wage rises. This legislation is already there, and it does the opposite of that. It puts us in an awkward position because it’s already there,” Ms Hume said.
Instead, the Minister pointed out some of the work that is being done to plug the current holes in the superannuation system as the government tries to ‘modernise superannuation’.
“The Protecting Your Super reforms were aimed at addressing erosion of small and inactive accounts, the accounts that were getting the worst deal from our superannuation system,” Ms Hume said.
Ms Hume also highlighted addressing fees for younger members which are unnecessarily reducing balances.
“Putting members’ interest bill prevented members, particularly young members, from paying for automatic insurance that is unnecessary.
“Often, these excessive premiums eroded the balances of young people that took years and years of contributions to finally increase their balance, which is not an inspiring entree into the world of compulsory super saving,” she said.
Ms Hume highlighted the superannuation covenant, which will legislate that superannuation funds are forced to guide members through retirement, as well as a superannuation super advocate body.
She also pointed out the importance of the Your Super comparison tool for members.
“The complexity of the superannuation system and the lack of simple, clear and independent information is currently holding Australians back from finding the best product for their particular circumstances,” Ms Hume said.
Despite facing its critics, Ms Hume was also vocal about the importance of stapling, which avoids creating duplicate accounts, leaving members as much as $98,000 better off in retirement.
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