Retirement
Why opt-in super proposal is a ‘secret tax’ on Aussie workers
A proposal to give workers the option to pick between a wage rise or a super contribution increase has been slammed by industry funds, branding it as “a secret tax” on workers.
Why opt-in super proposal is a ‘secret tax’ on Aussie workers
A proposal to give workers the option to pick between a wage rise or a super contribution increase has been slammed by industry funds, branding it as “a secret tax” on workers.
The Morrison government is reportedly weighing allowing workers to choose between putting money in their super or having more take-home pay.
Under the proposal, superannuation would be lifted up to 10 per cent on 1 July 2021, before workers are asked to decide between opting in for future superannuation increases or a rise in take-home pay.
However, Industry Super Australia (ISA) has labeled the proposal “a secret tax on Australians”, explaining that take-home pay is taxed at a higher rate than superannuation.
According to ISA, the move, reneging on the legislated super guarantee increases, could potentially cost workers billions.
“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 industry funds have labeled the proposal an “underhanded plan” to make super optional, which would force workers to pay themselves a wage increase by sacrificing their retirement savings – leaving the average 30-year-old couple up to $200,000 less at retirement.
“This isn’t choice – it’s a sneaky tax grab that will leave people worse off and rip up one of the system’s founding principles,” Mr Liden continued.
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.”
RELATED ARTICLES
About the author
About the author
Superannuation
Rest strengthens digital engagement with new leadership appointment
In a significant move to enhance its digital member services, Rest, one of Australia's largest profit-to-member superannuation funds, has appointed Darran Arnott as General Manager, DigitalRead more
Superannuation
Aware Super earns adviser-ready fund accreditation under new national framework
In a significant development for the financial advice sector, Aware Super has been awarded the prestigious Adviser-Ready Fund accreditation. This recognition comes under a new national framework ...Read more
Superannuation
Superannuation overhaul: Payday Super set to enhance retirement savings for millions
In a significant shift set to impact the retirement savings of millions of Australians, the way superannuation contributions are paid is about to undergo a major overhaul. However, despite the ...Read more
Superannuation
Rest expands retail property portfolio with US$250 million investment in US real estate fund
Rest, one of Australia's largest profit-to-member superannuation funds, has announced a substantial investment in a US-based real estate fund, marking a strategic expansion of its retail property ...Read more
Superannuation
TelstraSuper and Aware Super merger advances with key agreement
In a significant development for the Australian superannuation sector, TelstraSuper and Aware Super have reached a pivotal milestone in their merger journey by signing the Successor Fund Transfer ...Read more
Superannuation
Rest applauds legislative reforms to boost superannuation for low-income earners
In a landmark move, Rest has expressed strong approval following the successful passage of legislation aimed at enhancing the Low Income Superannuation Tax Offset (LISTO) through ParliamentRead more
Superannuation
Rest promotes Rachel O’Connor to head fixed income team
In a significant move within Australia's superannuation sector, Rest, one of the largest profit-to-member funds in the country, has announced the promotion of Rachel O'Connor to lead its Fixed Income ...Read more
Superannuation
Employment Hero raises concerns over superannuation bill's impact on small businesses
Employment Hero has raised significant concerns regarding the implementation of the proposed Supporting Choice in Superannuation and Other Measures Bill, which was recently recommended for passage by ...Read more
Superannuation
Rest strengthens digital engagement with new leadership appointment
In a significant move to enhance its digital member services, Rest, one of Australia's largest profit-to-member superannuation funds, has appointed Darran Arnott as General Manager, DigitalRead more
Superannuation
Aware Super earns adviser-ready fund accreditation under new national framework
In a significant development for the financial advice sector, Aware Super has been awarded the prestigious Adviser-Ready Fund accreditation. This recognition comes under a new national framework ...Read more
Superannuation
Superannuation overhaul: Payday Super set to enhance retirement savings for millions
In a significant shift set to impact the retirement savings of millions of Australians, the way superannuation contributions are paid is about to undergo a major overhaul. However, despite the ...Read more
Superannuation
Rest expands retail property portfolio with US$250 million investment in US real estate fund
Rest, one of Australia's largest profit-to-member superannuation funds, has announced a substantial investment in a US-based real estate fund, marking a strategic expansion of its retail property ...Read more
Superannuation
TelstraSuper and Aware Super merger advances with key agreement
In a significant development for the Australian superannuation sector, TelstraSuper and Aware Super have reached a pivotal milestone in their merger journey by signing the Successor Fund Transfer ...Read more
Superannuation
Rest applauds legislative reforms to boost superannuation for low-income earners
In a landmark move, Rest has expressed strong approval following the successful passage of legislation aimed at enhancing the Low Income Superannuation Tax Offset (LISTO) through ParliamentRead more
Superannuation
Rest promotes Rachel O’Connor to head fixed income team
In a significant move within Australia's superannuation sector, Rest, one of the largest profit-to-member funds in the country, has announced the promotion of Rachel O'Connor to lead its Fixed Income ...Read more
Superannuation
Employment Hero raises concerns over superannuation bill's impact on small businesses
Employment Hero has raised significant concerns regarding the implementation of the proposed Supporting Choice in Superannuation and Other Measures Bill, which was recently recommended for passage by ...Read more
