Funds turn up heat on super raids
Push to protect workers’ money
THE industry superannuation sector is stepping up pressure on the Albanese government to protect compulsory superannuation from raids by future administrations.
As it marks the threedecade anniversary of the introduction of the compulsory super scheme, there is concern in the industry that moves by the former Coalition government have paved the way to open up super for a range of uses, including buying a first home and other social needs.
Compulsory superannuation is set to rise from 10 per cent to 10.5 per cent on July 1.
“If you start opening it up, like Morrison did during the pandemic and like he suggested during the election campaign, it erodes the objective of superannuation and undermines members’ interests,” Industry Super Australia chairman Greg Combet said
Mr Combet, a former Labor federal minister, who is now also chairman of the $185bn IFM Investors, said it was time for the government to “get on with” legislation to prescribe the objective of super as saving for retirement – and ensure it is not available for any future government policy measures.
“There needs to be a good, national conversation about the purpose of superannuation,” he said. “We need to have it written in the law what it is for and, in particular, that the savings are preserved until people retire.”
His comments reflect a growing concern in the superannuation sector that it could be used for further political purposes. They follow similar calls from former treasurer Wayne Swan, now the chairman of the $65bn construction industry fund Cbus.
Superannuation Minister Stephen Jones has promised to look at the issue.
Mr Combet said the superannuation system involved a compact that money was saved and preserved for retirement in return for being taxed at just 15 per cent for contributions and earnings in the fund.
“Instead of being taxed at the marginal rate, the money is taxed at 15 per cent on the way in and 15 per cent on its earnings,” he said.
“That’s why you shouldn’t bust it open. No one ever said people should be given a tax concession to save for their first home.
“Pretty soon it will be to pay your private health insurance and then to pay off your HECS debt and your Woolworths bill. That’s not what the tax concession is for. It is to save for retirement.”
The federal government in 2020 allowed two drawdowns of superannuation for people in financial need during the Covid-19 pandemic.
Former prime minister Scott Morrison’s pre-election policy that super could be used for first-home purchases also reignited fears that future governments could draw on the superannuation pot for a range of reasons.
Mr Combet said there was a need to educate a new generation of workers, who had not lived through the long policy battle to implement compulsory superannuation, on the value of the system.