Retirement
Senator slams super funds: ‘People are smarter than super funds think’
Retirement
Senator slams super funds: ‘People are smarter than super funds think’
Senator Andrew Bragg has hit out at superannuation funds after they stood up in opposition to the government’s alleged plan to ask workers to choose between putting money in their super or having more take-home pay.
Senator slams super funds: ‘People are smarter than super funds think’
Senator Andrew Bragg has hit out at superannuation funds after they stood up in opposition to the government’s alleged plan to ask workers to choose between putting money in their super or having more take-home pay.
Late last week, Mr Bragg confirmed that the government is seriously considering enacting an opt-in super model, whereby workers would be given the choice to put more money into their superannuation or have more take-home pay.
“Super is the people’s money, and it doesn’t fall out of the sky,” Mr Bragg told the media.
“What a proposal like this will do is put the people in the driver’s seat so they could decide [whether] they want to have more super or want to have more take-home pay today,” he said.
Mr Bragg opined that “people are smarter than the super funds think”, after a large number of Aussies opted to access their super early under the government’s COVID-19 scheme.
“Most of the money that was taken out of super was put into people’s mortgages to pay them down. So, people wanted to improve their personal balance sheets. And that shows that people are smarter than the super funds think. I mean, the super funds, they think everyone’s stupid,” Mr Bragg said.
He said, “Superannuation has made home ownership more difficult to attain because for many, especially lower-income Australians, the trade-off between having more super and trying to get a deposit for a first house is real and genuine trade-off.”
The super funds, however, disagree with Mr Bragg and the Liberal government. Last week, Industry Super Australia (ISA) labelled the government’s latest proposal “a secret tax on Australians”.
“Wages are taxed at a higher rate than super contributions, leaving little for workers once the Tax Office takes its cut. ISA analysis shows that up to two-thirds of an increase could be lost in higher taxes and reductions in other government support payments,” ISA deputy chief executive Matthew Linden said.
“Removing the guarantee in the super guarantee to make it ‘optional’ is a recipe for higher taxes, lower lifetime incomes and a red tape nightmare for business.”
The Australian Institute of Superannuation Trustees (AIST) also weighed in on the issue, opining that the government looks “intent on undermining financial outcomes for Australians in retirement”.
“There is a broad understanding that unless we are compelled to save a portion of our wages, very few of us will have enough money for a financially secure retirement,” said AIST chief executive Eva Scheerlinck.
“There are lots of ways to deal with low wage growth, but forcing people to use their retirement savings to fund their own pay rise shouldn’t be one of them.”
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