As a result, the staged increase in the SG to 12 per cent will take until 1 July 2025 – seven years later than the current law dictates, and nine years later than the original Labor legislation intended.
Yesterday afternoon's repeal of the Minerals Resource Rent Tax was the result of a deal between the Coalition and the Palmer United Party (PUP) in the Senate.
A letter from Minister for Finance Mathias Cormann to PUP leader Clive Palmer also confirms the government will retain the Low Income Super Contribution (LISC) in its existing form until 30 June 2017.
Speaking to InvestorDaily, Australian Institute of Superannuation Trustees chief executive Tom Garcia said the key part of the bill is a new power granted to future federal treasurers.
"[The government] is allowing the Treasurer – whoever the Treasurer is – to be able to make changes to the superannuation guarantee at their discretion," said Mr Garcia.
The change would take the ability to halt or delay future increases to the SG out of the hands of the parliament, he said.
"It’s now no longer with parliament. It needs the rigour of parliament – it shouldn’t just be at the beck and call of the Treasurer," said Mr Garcia.
The new delay in the superannuation guarantee flies in the face of the Coalition's repeated promise that it would not bring any "negative changes" to superannuation, he said.
"When we had a government election promise of no negative changes in the first term, I think this could be seen to be a negative change for pretty much every working Australian," said Mr Garcia.
Mr Garcia was also at a loss when it came to the government's decision to repeal the LISC.
"If you’re going to keep [the LISC] for another two years, why are you getting rid of it at all?" he asked.
"It’s the best policy that’s come out in super in years. It’s the one that makes the most sense in terms of equity and it’s the one they’re scrapping," said Mr Garcia.
The Association of Superannuation Funds of Australia (ASFA) also expressed its concern at the government's decision to delay the SG increase to 12 per cent.
"While retaining the LISC for an additional two years will provide a much-needed boost to the superannuation savings of Australia's lowest-paid workers, we are greatly concerned that the changes to the timetable for SG increases will leave many Australians much worse off in retirement," said ASFA chief executive Pauline Vamos.
The Financial Service Council (FSC) said the new delay to the SG increase would mean $128 billion less in savings by 2025 for "working Australians".
"We are concerned it could exacerbate the nation’s low savings rate and that costs will be passed on to future generations," said FSC chief executive John Brogden.
"The changes announced today will reduce the likelihood that people can retire comfortably and that the costs of an ageing population will be passed on to the next generation," he said.
Industry Super Australia (ISA) expressed its "dismay" at yesterday's "short-sighted" deal in the Senate between the Coalition and the PUP.
ISA chief executive David Whiteley said the decision to pause the SG increase to 12 per cent and scrap the LISC was a "short-term budget fix that will have long-term budget impacts on age pension outlays".
"The scrapping of the LISC is plainly unfair. Over three million workers – two million of whom are women – will lose $500 per annum as a result of this change," said Mr Whiteley.
“These decisions will bewilder superannuation fund members and can only reduce confidence in the super system,” he said.
