Back in 1991, the notion of compulsory, employer-funded superannuation came as a shock to many. Now we are in 2020, and for a lot of people it’s still a shock. What shocks me is how many politicians and journalists seem to be unaware of the fact that superannuation is very largely funded by employers.
Regular clients of Workplace Advisory Group already know this because as employers they see the 9.5% that they are contributing to a dazzling array of super funds. The contribution rate has been frozen at 9.5% for over five years so you’d have to expect it is going to increase if the Government sticks with the whole idea of employer-funded superannuation.
Is there any suggestion that the government might throw out employer-funded super altogether? Certainly, there is a campaign being run on this point by a particular section of the media. The Federal Government is using this campaign as a stalking horse to see if there is any swell of public support for abandoning compulsory super. The carrot is something along the lines of “….. put the money back into the pockets of the workers…” No one has bothered to utter the truth that the money was never in the pockets of the workers to begin with. It came straight from the employers.
The superannuation industry itself is well and truly under the pump. Inflated fees, fat salaries for Board members who attend six meetings a year and do nothing else, dubious investment decisions, etc. etc. The list goes on. The public has recently been given a glimpse into the real world of superannuation fund “management” and they could see that it looked ugly. The word “rort” sprang easily to the lips of many observers.
So where is this leading us? The Productivity Commission is shortly going to hand down its comprehensive review of superannuation titled the “Retirement Income Review”. It will be the most comprehensive review of the superannuation industry since its inception in 1991.
I don’t have a crystal ball but I do know this: unless the superannuation industry severely cleans up its act and does so soon then employers will no longer be prepared to tip money in. Compulsory employer-funded superannuation is at a crossroads as never before.