After a lifetime of work, all Australians deserve a comfortable retirement. Superannuation plays an important role in delivering greater financial security in retirement.
Today almost every worker has their own superannuation account built from their own savings during their working life. Australia’s retirement savings system is a world-leader.
But universal superannuation is only possible today thanks to the campaigns fought by union members in the 1970s and 1980s.
Until unions and the then-Labor government introduced the Superannuation Guarantee in 1992, superannuation was deeply unfair and usually unavailable to the vast bulk of blue collar workers and women.
Unions also played a leading role in establishing ‘industry funds’ — these are low cost, not-for-profit superannuation funds dedicated to putting the interests of members first.
Today, almost 5 million Australian workers are members of industry funds and these funds manage hundreds of billions of dollars of workers’ contributions.
Higher super at risk from the Coalition
From a modest start of 3% in 1992, the Super Guarantee has gradually risen to 9.5%.
It is generally agreed that this is insufficient to provide an adequate income in retirement. The problem is exacerbated for women, whose careers and earning capacity is often interrupted by pregnancy and child caring responsibilities.
Recognising this, the previous Labor Government introduced new laws to lift the Superannuation Guarantee through a series of staged increases to 12% by 2019.
But since its election, the Abbott Government has put this at risk.
In the 2014 Federal Budget, the Government froze the Super Guarantee at 9.5% until 2018.
There are now concerns that the goal of 12% will never be achieved under a Coalition Government, which has historically been an opponent of universal superannuation for all workers.
Industry super under attack from big banks
The Abbott Government has sent a clear message it intends to put the interests of the big banks ahead of working Australians by attacking industry super funds - the best performing area of the superannuation industry.
The current system of default super funds ensures that workers get the best returns on their retirement savings – not the big banks.
Not-for-profit industry super funds have lower fees and have outperformed the for-profit retail funds owned by the big banks over any time period comparison.
Over a five-year period, industry super funds have returned an average of 8.1% per annum, compared to 6.48% by bank-owned funds.
Over a 10-year period, the difference is 6.75% (industry funds) to 5.09% (bank-owned funds).
But the Abbott Government wants to remove default super funds – which are usually not-for-profit industry funds – from workplace agreements.
This would open the door for the big banks move to get their hands on more of worker’s retirement savings.
The Commonwealth Bank financial planning scandal last year revealed that hundreds of millions of dollars was lost from the retirement savings of thousands of Australians through dodgy financial advice – yet the Abbott Government still wants to handover super to the big banks.
The current system lets workers vote for their default superannuation fund through enterprise bargaining or alternatively the independent umpire, the Fair Work Commission, nominates the fund that will deliver the best returns to workers.
It’s a fair and independent system that ensures workers end up with more money in their retirement savings.