Australian workers were promised a better retirement when a super guarantee increase was legislated, but now the Coalition is toying with the idea of backing out of the plan.
Ditching the increase or making it optional would leave average Australian families worse off by possibly paying an extra $20,000 in tax, an Industry Super Australia analysis shows.
Higher taxes and reductions in other government support payments would account for this loss.
Without a compulsory super increase, the research also found the average 30-year-old couple would have up to $200,000 less at retirement.
Ultimately, Australians across all income groups would be financially handicapped without more money pouring into their super.
Administering an opt-in system would also be a further cost for taxpayers and would translate to yet more paperwork for small business owners.
The Morrison government needs to get on with the promise to increase super, said Matthew Linden, deputy chief executive at Industry Super Australia.
“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,” he said.
“The government should follow through on the legislated increase to 12 per cent and not be exploring underhanded ways to renege on it.”
Stopping the plan to lift super would amount to nothing more than a cash grab by the government, Mr Linden said.
“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.”
Under legislation, the percentage of a person’s wage employers must contribute to retirement savings will increase – lifting from 9.5 per cent in staggered amounts to reach 12 per cent by 2025.
This change will help Australians rely less on the age pension and more on their own nest eggs.
Find out more about the super guarantee.
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.