Don’t mess with super

Seniors advocacy group National Seniors has warned policy makers against making changes to superannuation to raise funds for election promises, in light of speculation super could be targeted in the May budget.

Above: National Seniors chief executive Michael O’Neill

Policy makers considering further changes to superannuation to get them across the election finishing line in first place should think twice, warns seniors advocacy group National Seniors.

National Seniors has reiterated labour force survey results published in 2012 which found many older Australians think super rules changed too often and the uncertainty negatively affected their retirement plans.

The lobby group has highlighted the pervious findings (see below) in response to speculation superannuation may fall foul of the May federal budget, chief executive Michael O’Neill said.

“Superannuation is still young and its reputation ultimately rests on its ability to produce promised goods: the retirement incomes Australians have sacrificed and planned for,” Mr O’Neill said.

“Governments can’t flip flop about and suddenly shift the goal posts as we near retirement.

“Apart from undermining confidence in the system, it’s simply not fair,” he said.

Referring to the government’s scrapping of the $50,000 contributions cap for people aged over 50, Mr O’Neill (pictured) said the move “may have given the government an extra $1.5 billion to play with in 2012, but it left many older Australians unexpectedly short changed”.

“It sends a message to younger generations that what they buy into today could, on a political whim, look vastly different 30 years down the track,” said Mr O’Neill.

The National Seniors labour force, which was carried out for the government’s forum on mature age participation included interviews with over 3000 Australians aged 45 to 74.

Results were published in the National Seniors Productive Ageing Centre’s Barriers to Mature Age Labour Force Engagement in Australia report.

“One half of people with some knowledge of superannuation rules believe the rules change too frequently,” the report said.

“The lack of certainty of superannuation rules has impacted the retirement plans of 39 per cent of these people who are not retired.”

Link to pdf of the report here: National Seniors Productive Ageing Centre’s Barriers to Mature Age Labour Force Engagement in Australia

Super reforms

The government has recently been spruiking the benefits to mature workers of the next wave of super reform, as reported by AAA last week.

From July 1 the upper age limit for compulsory super will be removed and the super guarantee will increase to 9.25 per cent as it begins its gradual increase from 9 to 12 per cent over seven years.

In response to the government’s promotion of the upcoming changes, the other seniors advocacy group, COTA, said it welcomed the incoming reforms.

However further improvements are needed because current levels of super among older Australians are inadequate, COTA chief executive Ian Yates said.

“We’re sympathetic to the point that if you keep changing super, people will lose confidence,” Mr Yates said. But added other measures were needed to bolster super contributions for older Australians.

“The contributions limit for one,” he said.

“We’ve been critical of the move in the last budget to reduce the contributions limit.

“We’ve advocated in this year’s budget submission to have this addressed,” he said.

Elsewhere Mr Yates said there needed to be more incentives for people on low and middle incomes because currently the main tax advantages were for people with a higher income.

Meanwhile Aged services provider ACH Group has welcomed the reforms to remove inequities for workers aged 70-plus in a tweet: “Great news for everyone – @ACH_Group went down this path early last year!”

The provider extended the benefit of employer contribution superannuation to its workers aged 70 years and over in March 2012.

Read AAA’s coverage of the latest wave of super reforms here: Super reforms benefit older workers

Survey stats

Following are some relevant statistics on super and the over-45s from National Seniors’ full report on the barriers to mature age employment:

  • 94 per cent of people who have worked in the past 20 years have contributed to their super
  • 81 per cent of those yet to retire expect super to be their main income source in retirement 
  • 47 per cent have a fair amount or great deal of knowledge of the super rules
  • 52 per cent of those who know something about super rules say they change too often
  • 39 per cent of the non-retired say that this uncertainty is affecting their retirement plans
  • 25 per cent of people who are retired say this lack of certainty is affecting their retirement
Tags: budget2013, ian-yates, michael-oneill, super-reform, superannuation,

1 thought on “Don’t mess with super

  1. I disagree. We need very substantial amounts to fund needed improvements in aged and disability care and superannuation is the obvious target. In particular the concessional tax rate charged on superannuation contributions is (a) inequitable because the vast majority of the benefit goes to those who need it least and (b) it is inefficient because it costs a current $2 in foregone revenue for every potential $1 in pension savings somewhere down the track.

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