Is the super system outdated?

The changing structure of the Australian workforce means that the superannuation system envisioned by Paul Keating with the super guarantee needs to modernise to better suit how people work nearly three decades later, a Mercer report released yesterday has found.

Speaking at the report’s launch, the Demographic Group’s Bernard Salt said that demographic shifts were reshaping the Australian workforce, and cultural change was needed to encourage gig workers to put super away, workers in their 40s and 50s to further train or retrain, and Millennials to engage more in their super in response to these movements.

When superannuation was introduced, for example, only 11 per cent of the population was aged over 65 and 73 per cent of workers were employed full-time. In the 2016 census however, 16 per cent of the population was over 65 and larger numbers are employed in working arrangements such as contract or part-time.

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The report, which surveyed 80 executives and interviewed seven business leaders, found that 54 per cent expected to employ more contractors at the expense of permanent staff, while slightly over 60 per cent predicted an increase in part-time employees of both genders.

In the current superannuation system, these workers would largely go without superannuation guarantee payments, causing obvious concern for supporting retirees down the track.

Mercer chief executive, Ben Walsh, said that while these sorts of workers used to largely be people starting their own businesses, in which case the superannuation guarantee would have caused cashflow issues, the fact that much of the contractor workforce was now engaged in knowledge work meant that this approach needed updating.

The priorities of younger Australians when it comes to work also challenge the current superannuation system, with an increased emphasis on holding a variety of jobs meaning many had multiple super accounts.

Walsh pointed to the fact that 39 per cent of Australians have multiple super accounts, many of which he said were being diminished by fees, as one of the most startling statistics in the report.

In light of this demographic change, the report found that 36 per cent of employers believed that the super system was not suitably structured for the future workforce and 56 per cent agreed it needed adjustment.

Salt said that the push for reform could come from businesses: “I actually think the business community is ahead of society on the issue [of super reform]”, but that this thought needed to be translated into action.




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The Liberals should be congratulated for attempting to permit super contributions from 65 to 74 without meeting a work test (which is not required for under 65's). Sadly, the opposition stopped it. Removal of the work test needs to happen.

Would be interested in your justification to remove the work test.

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