Every Australian worker deserves a great retirement. Not an average retirement, but a really great retirement.
And that is exactly what the scheduled increase in superannuation contributions will work towards for every worker.
Government legislation will see super guarantee contributions – the amount of super an employer pays their employees on top of wages – rise from 9.5 per cent up to 12 per cent by 2025.
The increases begin from July and are set to make a huge difference between a retirement spent scraping by on the pension and a retirement spent enjoying all the rewards a working life is due.
But if history repeats itself, the super increases could be under threat.
In 2014, the Coalition dumped the super guarantee increases which were originally planned to begin that year and promised workers they would receive wage increases instead.
Yet an Industry Super Australia analysis of 8370 enterprise bargaining agreements show the promised wages boost never transpired.
Delays to super guarantee increases have already cost workers on the cusp of retirement about $100,000, further research shows.
Claims of a wage increase in place of a super guarantee rise are being repeated this year by some politicians who contend wage growth is on the cards for 2021.
However, it is highly unlikely wages will lift this year, thanks to the economic impacts of the pandemic.
In fact, economists predict Australian wages may not increase in real terms for another five years thanks to the “coronacession”.
“When the super rate was last delayed in 2014 there was no resulting wage rise, and millions of workers’ pay packets were cut,” said Industry Super Australia chief executive Bernie Dean.
“Politicians couldn’t wave a magic wand to increase wages then, and they don’t have a wand now.”
The incredibly low possibility of wage growth underlines the importance of the legislated super guarantee increase, particularly with the 0.5 per cent lift scheduled this year.
It may be the only pay rise on offer for Australian workers this year and into the foreseeable future.
“These small, staged increases are affordable for employers and the key to giving people more choice about when they can stop work and have control over their life in retirement,” Mr Dean said.
Find out more about the super guarantee going up.
See www.industrysuper.com/assumptions for more details about modelling calculations and assumptions. Consider a fund’s Product Disclosure Statement (PDS) and your personal financial situation, needs or objectives, which are not accounted for in this information, before making an investment decision.