Close super guarantee salary sacrifice ‘loophole’, Senate inquiry told

A Senate inquiry has been told that a ‘loophole’ which allows salary sacrifice contributions to be counted against Superannuation Guarantee (SG) obligations should be closed.

The Senate has been conducting an inquiry into Super Guarantee non-payment. Several of the submissions to the inquiry have called for this, so-called, loophole to be closed, including a joint submission by Industry Super Australia and Cbus.

“Currently, if an employee makes voluntary contributions, a loophole allows their employer to count this towards SG obligations,” said the submission, calling for it to be closed “immediately” by the Government. Read more...

Super contributions down on uncertainty on policy and slow wages growth

Total superannuation contributions are down over the past twelve months, likely due to uncertainty around policy settings and slow wages growth, according to the FSC/USB State of the Industry report 2017.

The report says that total contributions over the past twelve months are down 1.1% from previous levels, with employer contributions up 0.3% but failing to offset a 1.5% decrease in member contributions.

FSC and UBS ascribe this to slower wages growth and the recent uncertainty around superannuation policy. Read more...

Government should return to 2021 date for 12% SG rate, says FSC

The Financial Services Council says the Government should implement its original commitment to increasing the Superannuation Guarantee rate to 12% by 1 July 2021.

The SG rate was set to increase to 12% from 1 July 2019. Following the 2013 Federal election the incoming Liberal Government said it would delay this by two years, to 2021. However as the Minerals Resource Rent Tax worked its way through the Parliament this schedule was further delayed. The SG rate is currently legislated to reach 12% from 1 July 2025. Read more...

SG underpayment costing workers near retirement tens of thousands

Workers nearing retirement who don’t receive their full superannuation entitlements could be tens of thousands of dollars worse off, according to Industry Super Australia.

“Using the latest ATO data from 2013-14, the research found that people aged 60 to 64 on salaries ranging from $50,000 to $75,000 who weren’t correctly paid their SG that year, had overall super balances that were $35,089 or almost 40 percent less than those who were,” said ISA.

Industry Super Australia (ISA) released the research the same day as the first public hearing by the Senate inquiry into Super Guarantee non-payment. Read more...

Government “acting on” SG non-compliance, forms working group

The Government says it is acting on Superannuation Guarantee non-compliance, in part by establishing a multi-agency working group to investigate the issue.

A statement from Minister for Revenue and Financial Services, Kelly O’Dwyer, said that SG non-compliance is a “very serious issue.”

“The Government takes Superannuation Guarantee non-compliance very seriously.”

“Employers who do not pay employees their superannuation entitlements are breaking the law.”

The Government has established a “new multi-agency working group to investigate and develop practical recommendations to deal with superannuation guarantee non-compliance”. Read more...

ATO and Industry Super Australia to appear before SG non-payment inquiry

The ATO and Industry Super Australia will today appear before the first public hearing of the Senate inquiry into the non-payment of Superannuation Guarantee.

The Senate Standing Committee on Economics started the inquiry into the impact of Superannuation Guarantee (SG) non-payment in December 2016. It is due to report in late March 2017.

“Considered long overdue, the Senate inquiry comes as access to the Age Pension tightens in the expectation that Australians will be able to provide for themselves as the super system matures,” says Industry Super Australia. Read more...

Workers missing out on billions in superannuation each year

Almost a third of employees in Australia are not receiving their full superannuation entitlements, to the tune of $3.6 billion in 2013/14, according to research by Industry Super Australia and the super fund Cbus. But little is being done about this issue, and unless action is taken this could mean $66 billion in unpaid super in the ten years to 2024.

The research, based on ATO and ABS data, indicates that 2.4 million workers – around 30% of employees eligible for Super Guarantee – are not being paid their full superannuation entitlements. According to the report 2.15 million employees were underpaid an average of $1,309 in super in 2013/14 and 277,000 workers in the cash economy missed out on an average of $2,888. Read more...

Senate sets up Super Guarantee non-payment inquiry

A Senate committee will be conducting an inquiry into the impact of non-payment of Superannuation Guarantee (SG).

The Senate Economics References Committee will conduct the inquiry, which is due to report by 22 March 2017, following the passage of a motion by Labor Senator Katy Gallagher.

The inquiry will consider the economic impact of SG non-payment on workers, employers and government revenue.

Also included in the terms of reference are the accuracy and adequacy of the information collected by the regulators and the role, effectiveness and responses by the ATO. Read more...

Super guarantee doesn’t need to be raised to 12%, says Grattan Institute

Superannuation myth, don't need to raise superannuation guarantee to 12%, conflate superannuation savings and retirement savings, Grattan InstituteThe Grattan Institute says it is a “big mistake” to conflate superannuation savings with retirement savings, and so the Superannuation Guarantee rate doesn’t need to be raised to 12%.

Superannuation is likely to remain the smallest retirement income pillar, and accounts for only 15% of household wealth, according to analysis conducted for the Grattan Institute based on ABS data and the Melbourne Institute’s HILDA survey.

“When confronted with facts about the modest contribution of super to retirement savings, many commentators point out that the system is immature,” says the Grattan Institute. Read more...

Labor adopts Coalition timetable for Super Guarantee rate increases

Labor, ALP, superannuation policy, increases to superannuation guarantee rate, SG rate, 9.5%, 12%Labor has seemingly dropped support for faster increases to the Superannuation Guarantee rate, in a week which also saw the adoption of savings from super changes in the 2016 Budget but not the policies.

The ALP has frequently criticised the Government for freezing the SG rate at 9.5% and slowing the increase to 12%. However Shadow Treasurer Chris Bowen has now indicated his party won’t have a policy of faster increases in the SG rate.

In a press conference the Shadow Treasurer was asked: “Another area of your super policy that isn’t clear on your list of positive policies. The Government froze the super guarantee at 9.5 per cent until I think it was 2018. After that, I presume it increases. At the time you were very vocal against that decision. I assume now you accept that, because we’ve had no policy?” Read more...