Last week, I had the pleasure of meeting a well-respected chef in Sydney.
Of course the topic immediately turned to superannuation. He didn’t care much for compulsory superannuation and was dead against the idea of the superannuation guarantee rising from 9 per cent to 18 per cent down the track. According to the chef, the proposed rise to 12 per cent would add to staff costs, eating into his “very tight” profit margins.
Our Sydney chef is not alone in his views towards superannuation. According to a government survey released last week on attitudes to superannuation, there is a level of resentment about the SG among employers.
The survey found employers felt SG payments were an extra burden and a disincentive to employing staff.
Employers fear they will be unable to afford the rise to 18 per cent.
What was interesting about the survey was that employers had a general sense that the SG is paid in addition to wages, rather than being part of wages.
This view is in stark contrast to an earlier Australian Institute of Superannuation Trustees survey, which found the majority of people not only supported the SG hike but were prepared to pay for it.
It’s interesting that compulsory super is seen as a cost by some sections of the community.
The system puts the risk on the individual and not the company to fund retirement costs.
Without an SG, Australia would have been burdened by a greater cost of not meeting its retirement obligations, something that some countries in the world are now facing.
American states are struggling to fund their retirement liabilities. According to an article in The Economist, these states are facing a pension shortfall of as much as $3.4 trillion.
Even the United Kingdom is facing unfunded pension liabilities, with some companies using alternatives to funding their pension gaps – drinks group Diageo is using maturing whiskey as collateral for its pension liabilities.
The 9 per cent of mandated savings each year was touted by many as helping cushion Australia’s capital markets against the global financial crisis.
The super industry has also supported Australia’s financial services sector to reach over $1 trillion in funds under management.
Perhaps the chef could take some comfort in the knowledge that a number of his patrons were people from the financial services sector whose businesses had grown on the back of compulsory super.
