The Morrison government is reportedly weighing allowing workers to choose between putting money in their super or having more take-home pay in the aftermath of the release of the Retirement Income Review (RIR) – but the Australian Institute of Superannuation Trustees (AIST) said that the government seems “intent on undermining financial outcomes for Australians in retirement”.
“There is a broad understanding that unless we are compelled to save a portion of our wages, very few of us will have enough money for a financially secure retirement,” said AIST chief executive Eva Scheerlinck.
“There are lots of ways to deal with low wage growth but forcing people to use their retirement savings to fund their own pay rise shouldn’t be one of them.”
Making some of the legislated increased opt-in – with workers able to choose whether to pocket the increase – is a novel way of sidestepping accusations that the government is trying to undermine the superannuation system and could prove a popular policy in combination with tax cuts already unveiled for middle-income earners. The move has been welcomed by a number of politicians, including standing committee chair Tim Wilson.
“Just wait for the shrill outrage that workers dare keep more of their own $ (sic). It’s the sound of hogs being dragged away from a multi-trillion trough they use to pay themselves bonuses in the tens of millions at the cost of take home pay & home ownership,” Mr Wilson said.
The proposal echoes one made by superannuation critic Andrew Bragg in his maiden speech to Parliament, in which Mr Bragg suggested middle-income earners “could simply tick a box to get a refund when filing an annual tax return.” But lobby group Industry Super Australia (ISA) warned that the change would “slug workers with higher taxes”, as wages are taxed at a higher rate than super contributions.
“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,” said ISA deputy chief executive Matthew Linden.
“The Government should follow through on the legislated increase to 12 percent and not be exploring underhanded ways to renege on it. 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.”
