PM’s super ‘time bomb’
Workers may lose billions if rate rise scrapped
BILLIONS less would flow into the retirement funds of workers each year if the Morrison Government cans a promised increase to the super rate.
Modelling by Industry Super Australia found Victorians could lose out on $3.6 billion per year in their retirement savings if the legislated super guarantee rate rise to 12 per cent by 2025 is scrapped.
Analysis by the superannuation body found a 30-year-old worker earning about $85,000 could lose out on an extra $85,000 in super by the time they retire.
The increase was crucial in ensuring ageing Australians had enough money without needing to rely on government handouts in their retirement, according to Industry Super Australia chief executive Bernie Dean.
“Unless the super guarantee rate is increased, Australia’s ageing population could flood the aged pension, creating a fiscal time bomb we all would pay for,” he said.
“Dumping or delaying the super rate increase will cost Victorian workers billions and for many the chance at a retirement of their choosing.”
The modelling also found more than 90,000 workers in
IT is that time of year, when heading back to work after the summer break, that the inner entrepreneur dares to think, “what if?” And actual entrepreneurs ask themselves how they can improve their business in the coming 12 months.
According to the Oxford English Dictionary, an entrepreneur is someone who sets up a business and takes on “greater than normal financial risks in order to do so”.
Risk certainly focuses the mind, and so it is no surprise that most business owners embody a single-minded approach to life. The advantage of such blinkered obsession is that things get done. The disadvantage is that not everything gets done.
Common among the list of items that never make it onto an entrepreneur’s to-do list are personal finances. They often get leapfrogged in a headlong rush towards the far more appealing prospect of managing the business.
Most small business operators I know would not, for example, be able to tell me how much they need to earn from their business in order to keep their “personal financial river” flowing.
Yet the amount of this personal break-even is probably the most critical piece of information for any entrepreneur. Knowing this figure also reduces business risk and provides an almost unfair advantage over the competition. the Melbourne electorate would have an average of $1840 less in their accounts each year at retirement if the increase did not go through.
The average Lalor resident would be $1565 worse off, while workers in Macnamara would have $2020 less in their super accounts each year if the rate stayed as is.
The super guarantee rate is legislated to rise from 9.5 per cent to 12 per cent by the middle of 2025
Last September Treasurer Josh Frydenberg announced the first major review of Australia’s retirement income system in three decades. The ongoing review is looking at how the age pension, compulsory super and voluntary savings interact.
At the time of its announcement, Mr Frydenberg dismissed the idea of changing the rate increase policy.
“There is a legislated increase of compulsory super to 12 per cent and that remains the Government’s position and policy,” Mr Frydenberg said.
“Superannuation is important in our system.”
Shadow treasurer Jim Chalmers said the review should not lead to cuts to the promised super rate increase.
“You don’t boost retirement incomes by freezing the super guarantee,” he said.