The superannuation guarantee has been frozen for seven years after the federal government made a deal with Clive Palmer to repeal the mining tax.
Under this deal, superannuation contributions will be halted at 9.5% of salary until July 1, 2021. After this date, it will increase by 0.5% each financial year, until it reaches 12% in 2025.
The target of 12% will now be met three years after the revised date announced by the Coalition in their Budget.
Director and co-founder of the Switzer Super Report, Paul Rickard, says that we need to put the consequences of this deal into perspective.
“[The superannuation guarantee] wasn’t scheduled to go up to 10% until 2018/2019, so that’s almost four years away before the first increase.”
“So under the Coalition’s original plan, it was to be completed by the start of 2022/2023 – that’s eight years into the future. Under the revised plan, it is going to be completed by 2025/2026, which is eleven years into the future… so these dates are all a long way out…”
Those against the delay have referred back to the Coalition’s pledge made before last election; that we could expect no “negative, unexpected changes occur in the superannuation system so that Australians planning for their retirement can do so with confidence.”
Many have argued that this new deal is therefore incongruent with the promise made, and Paul Keating has been one to come out attacking these changes as a “wilful sabotage of the nation’s universal savings scheme.”
Rickard says that while we do need to accept that we won’t see the super increases occur for a while still, it’s not such a bad thing for employers, and getting the mining tax repeal through is a small victory for the government.
