The Superannuation Guarantee rate would now have been 12%, under Labor’s legislated timetable. But, after delays legislated under the Coalition, it remains at 9.5% and won’t reach 12% until 2025.
If the Coalition hadn’t froze and delayed increases to the Superannuation Guarantee it would have gone to 12% on 1 July 2019 (up from 11.5%).
Labor legislated for the Super Guarantee rate to reach 12% on 1 July 2019. However this was pushed back under the Coalition, with the SG rate not scheduled to reach 12% until July 2025.
After the Super Guarantee rate had reached 9%, Labor legislated in 2012 for it to gradually increase to 12%. This was part of the Minerals Resource Rent Tax, and the delay under the Coalition was part of its repeal. Only two increase – from 9% to 9.25%, and then to 9.5% – happened before the timetable was changed.
What should the Super Guarantee rate be, and when?
Whether to increase the SG rate, and to where and how fast, is a live issue. Superannuation funds say the SG rate should go to 12% “as soon as possible”. But some, including the Grattan Institute, argue that superannuation savings are on track to be sufficient and the money could otherwise go to increased wages.
The Productivity Commission recommended the completion of a review into the role of compulsory superannuation in the retirement incomes system before any increase to the Super Guarantee rate. The Government has yet to fully respond to the Productivity Commission report, but appears to be in favour of such a review. The SG rate is legislated to go to 10% on 1 July 2021.
Where do the major parties stand on the SG rate?
Treasurer Josh Frydenberg has said the Coalition has “no plans” to change the rise to 12%, though this could leave open the option of pushing back the increases. This may be informed by the potential review of the retirement incomes system, which Frydenberg said it was his “intention” to establish.
Labor’s policy on the Super Guarantee is also somewhat unclear. Labor has been critical of the delay to a 12% Super Guarantee rate, but hasn’t committed to any faster increases than the Coalition.
Former Labor Shadow Treasurer Chris Bowen said he didn’t believe 9.5% was adequate and a 12% rate was needed, but wouldn’t commit to a faster timetable, only that Labor would not accept any further delays.
The Labor party platform doesn’t have a date by which a 12% SG rate should be reached, instead saying Labor will “urgently prioritise this objective by ending the freeze and increasing the Superannuation Guarantee to 12 per cent as soon as practicable”.