Super balances can’t be rebuilt if SG remains frozen

A key Parliamentary committee was told weeks ago that the scheduled rise in the superannuation guarantee (SG) to 12% would need to occur to help workers overcome the retirement income shortfall they were facing because they had accessed the Government’s hardship early release regime.

Industry Super Australia (ISA) used answers to questions from the House of Representatives Standing Committee on economics to reinforce that lifting the SG would prove necessary to helping restore superannuation balances.

It said a gradual and manageable increase in the SG had been locked into law for a long time and had “already faced delays and the detrimental impact on workers' retirement savings due to that has been considerable, it has provided businesses with a longer lead time to adjust and factor the law into their operations”

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“Deepening the importance of this legislated gradual rise is the need to rebuild member balances particularly those reduced by accessing their super early under the government's temporary measures,” the ISA told the committee.

It noted that, “significantly in the current context there is evidence that following the 1991 recession the rebound in economic growth and employment coincided with an incremental but steady increase in the SG”.

The message to the parliamentary committee came as a precursor to ISA this week claiming some vocal coalition back-benchers were using the COVID-19 downturn as a cover for scrapping the SG timetable – something it said could see a couple on average wages lose between $150,000 and $200,000.

The ISA said the back-benchers were not only out of touch with public sentiment, but out of step with the Prime Minister, Scott Morrison, the Treasurer, Josh Frydenberg and the Assistant Minister for Superannuation, Jane Hume, who had had “already publicly quashed their ideologically driven plans to cut Australian workers retirement savings”.

“The MPs, who themselves receive more than 15% super, say that 9.5% is enough for the average Australian to fund a dignified retirement,” ISA said. “They use the specious argument that an increase comes at the expense of wages, despite recent historic evidence showing there is no equal drop in wages when the super guarantee increases.

“It was the same argument used to freeze the Super Guarantee in 2014, but wages have mostly flatlined since then – underlining the falseness of their arguments. 

“The claim that because Australia is entering a recession that the Super Guarantee rate must be cut, doesn’t hold water either, as there is evidence that following the 1991 recession the rebound in economic growth and employment coincided with an incremental but steady increase in the SG – like what is planned now.”

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Perhaps if the Industry Funds stopped all of their advertising on TV the members might have many more benefits in their Super for the future.

But of course APRA has never had the balls to enforce the "Sole Purpose" legislation with these funds.

It depends on the salary arrangement of the superannuant. My wife had to sign a new contract for her role recently, like many she is on a wage package, not a salary plus SGC arrangement. Written into her contract is any legislated rise in SGC comes out of their salary component, so while her super may well grow her take home pay drops, reducing household discretionary spend.

What if Industry Fund directors who elect to transfer the fees paid for their services to their nominated trade union elect instead to retain their fees within the fund for the benefit of the members ?
Here's some examples of industry organisations and third party recipients who benefited from the re-direction of Industry Super Fund directors fees in the 2013/14 and 2016/17 years.
Screen Producers Australia $83,977
Christian Schools Australia $69,385
Association of Independent Schools NSW $66,029
Bowls Qld $20,355
Live Performance Australia $8,164
Canegrowers $86,858
Canberra Girls Grammar School $43,005
Catholic Diocese of Wollongong $18,310
Christian Insurance $10,011
Dental Health Services Victoria $65,776
Epping Floral Centre $82,340

The list is extensive and includes many significantly larger amounts of donated directors fees to a vast range of third party organisations.
These are fees paid to directors of Industry Super Funds that find their way to completely unrelated organisations that benefit from this process.
And the ISA is concerned that members may be withdrawing their own funds approved by the Govt ??????
Wow !!

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