Associations slam proposed law changes

Alex Burke,  Senior Writer,  No More Practice Education

Australian Institute of Superannuation Trustees CEO Eva Scheerlink has hit back at proposals from Liberal backbenchers to remove low income earners from mandatory super and cancel the planned increase of the Superannuation Guarantee to 12%.

In a statement, Scheerlink said "every Australian deserves to be financially secure in their retirement," hence the universality of the super system. She added that the calls to remove low income earners from compulsory super "have nothing to do with helping the less well-off and everything to do with saving the Government money."

She explained: "Well-paid Coalition MPs who receive super contributions of at least 15.4 per cent need to step out of their bubble and ask people what it is like to live on the Age Pension without any extra savings."

"The current debate and uncertainty surrounding the legislated timetable for increasing the Superannuation Guarantee rate is unhelpful for Australians trying to make retirement plans," she continued, "and only serves to undermine confidence in a superannuation system that is routinely rated as one of the best pension systems in the world."

Industry Super Australia also commented, saying that removing compulsory super for low income workers "would not only undermine the very premise of Australia’s superannuation system, it would see vulnerable workers pay more taxes for less money at retirement."

ISA argued that for a person earning $50,000 per year, "raiding their super guarantee contributions would increase their personal income tax bill by $1,710 a year - an increase of nearly $1,000 on the low tax they would otherwise pay in super."

"Any claim that this would 'save' $1.8 billion conveniently ignores the fact that wages are taxed at a higher rate than superannuation," the statement continued, "meaning this would actually cost low income workers more in the long run."

What do you think about the proposal to make super voluntary for workers on less than $50,000 per year? In justifying it, Liberal Senator Andrew Bragg said super "is a classic case of vested interests triumphing over the national interest" and that it has "made the unions, banks and insurers richer than ever.”


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JOHN GILLIES

30/07/19

The idea has probably arisen by the flock of idiots who have been making decisions about the Financial Srvice Industry for the last several year who have NQ KNOLEDGE of the industry No different to the most recent can life insurance covers. I ran across this 2 years ago where with out legislation one of the austsuper group had removed the TPD because the policy was no longer receiving contributions. Would you go to a Resturant where 20 or so know nothing cooks were stiring the broth? aged lify

Paul Murphy Murphy

30/07/19

Once again we are reminded of how out of touch our Politicians are!

Peter Davison

30/07/19

There is a further flaw in the proposal, regarding what happens when an under $50,000 pa income earner pushes up to $50,001. While earning just $50,000 our worker has become addicted to the extra net disposable income of $3,040, or $58.46 per week. If he/she does a bit of overtime, or gets a second job, or gets a pay rise that takes them up to $50,001 pa that $58.46 will be snatched away. They will not achieve the same net disposable income until they are earning an extra $91.34 per week. Ie, unlessl he/she can earn more than an extra 9.5% pa, there is a disincentive for our worker to seek to earn more than $50,000.

Sue Allen

30/07/19

So, just remind me again how the SG works. It's payable by employers. It doesn't come out of wages. So how does "raiding their super guarantee contributions" change workers' tax? And how can Liberal Senator Andrew Bragg say super "is a classic case of vested interests triumphing over the national interest" when surely it is the national interest to have lower paid workers building a superannuation nest egg. No wonder confusion reigns supreme. No wonder politicians are struggling to engage our interest. Beats me how such ignorance is acceptable in those making laws for the ordinary Australian, when I, as a licensed financial adviser wouldn't get away with it in a fit, but instead am faced with a government-mandated extra education regime. What's good for the goose (politician) is not good for the gander (financial adviser).

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