Paul Keating says the 9.5% Superannuation Guarantee rate “won’t cut it” and the legislated 12% rate will “barely cut it”.
Speaking to 7.30, Keating said that when he introduced superannuation people retired “about” 65 and died around 85. But that now people were living into their late 80s and children today could expect to live to 100 or 105.
“The superannuation pool isn’t large enough to maintain the sort of standard of living we wish for them,” he said.
A Bill to introduce potential prison sentences for Superannuation Guarantee non-compliance appears likely to pass with the support of, at least, the Liberal and Labor parties.
The Bill also extends Single Touch Payroll requirements to small employers – 19 and fewer employees – from 1 July 2019, among other changes.
With the Federal Budget around a week away the Grattan Institute have said the Government should abandon plans to raise the Superannuation Guarantee rate.
The Grattan Institute says that if politicians really wanted to help low-income workers and fix the budget they should “act soon” and cancel the scheduled increase in the SG rate from 9.5% to 10% on 1 July 2021.
The Institute says that enterprise agreements currently being negotiated will take the legislatively scheduled increase into account.
The Australian Institute of Superannuation Trustees (AIST) has called for the Government to confirm a commitment to increasing the Superannuation Guarantee rate to 12%.
The Coalition delayed increases to the SG rate, so it would reach 12% from mid-2025 instead of the previously legislated mid-2019. However recent comments by senior members of the Government suggest this could be further delayed or paused.
Related: Minister argues against raising Superannuation Guarantee rate
AIST CEO Ms Eva Scheerlinck said it was “worrying” that the Government appeared to be backing away from its own legislated timetable for increases to the Super Guarantee rate.
A Government Minister has argued against increasing the Super Guarantee rate, and suggested that the superannuation industry is calling for increases out of self-interest.
The Government appears to be building a case, ahead of the Budget in May, for wages in the present over superannuation in the future.
“It would be wrong to think that the ‘super-guarantee’ is a guarantee of someone’s present lifestyle in retirement,” said Minister for Revenue and Financial Services Kelly O’Dwyer at the AFR Banking and Wealth Summit.
Prison sentences for failing to meet Superannuation Guarantee obligations are “not justifiable”, says the Tax Institute.
Treasury has been consulting on tougher Super Guarantee rules. The draft legislation includes a new power for the ATO – to give a direction requiring the payment of Superannuation Guarantee Charge to the tax office. Failing to comply could result in either or both 12 months’ imprisonment or 50 penalty units ($10,500 at current rates).
“In our opinion, this provision should not be introduced as the current penalty regime already provides for significant penalties,” says the Tax Institute in a submission on the draft legislation.
The Government has done a 180-degree turn on penalties for employers who don’t pay the required amounts of Superannuation Guarantee on time, going from winding back penalties to increasing them – including prison time.
The Government has introduced to Parliament a Bill to increase the penalties for Super Guarantee non-compliance, the Treasury Laws Amendment (2018 Measures No. 4) Bill 2018. It was only in December that the Government officially dropped its policy of winding back some of the penalties for underpayment of Super Guarantee.
The majority of self-employed people have little or no superannuation, research by the Association of Superannuation Funds of Australia (ASFA) has found.
The research found that most self-employed people – who account for around 10% of the workforce – will struggle to afford a comfortable retirement. The majority of the self-employed have lower super balances, across all age groups, compared to employees, with women at a “particular disadvantage”.
ASFA found that 19.1% of self-employed people have no superannuation, compared to 8% of employees.
A proposal to not increase the Super Guarantee rate condemns low-paid workers to poverty in retirement and women to relying on rental handouts, says the Association of Superannuation Funds of Australia (ASFA)
The Grattan Institute recently argued in a research paper that superannuation is not effective in providing retirement incomes for low-income workers. Instead of raising the Super Guarantee rate, the Institute called for lower superannuation tax concessions and boosting rental assistance for retirees.
Employees are “short-changed” by proposed Government legislation cracking down on Superannuation Guarantee underpayment that doesn’t go far enough, says the Nick Xenophon Team.
NXT MP Rebekha Sharkie said: “While the Nick Xenophon Team welcomes the fact that the Government is finally paying attention to this issue after we introduced our own Private Member’s Bill last year to try and fix the problem, we feel the Government’s draft legislation fails to give employees any real power to fight for their own money.”