In his reply to the federal Budget, Tony Abbott said a Coalition government would freeze the SG at 9.25 per cent until 2015/2016, with the compulsory employer contribution to hit 12 per cent by 2022 – two years later than Labor.
Financial Services Council’s John Brogden called the announcement a “bitter disappointment” and “a blow to the retirement savings of Australians”.
Mr Brogden called on the Coalition to re-commit to increasing the SG to 12 per cent, and said the decision, if implemented, would “push the increased cost of an aging population onto future generations”.
Australian Institute of Superannuation Trustees (AIST) chief executive Tom Garcia said Abbott’s announcement was counter to the Coalition’s pledge to make “no unexpected adverse changes to superannuation” in its first term if it won the next election.
“We are very concerned that this announcement by the Coalition could be the thin end of the wedge – it brings into question their commitment to compulsory superannuation,” Mr Garcia said.
The Industry Superannuation Network (ISN) released a statement claiming that the delay in the SG increase could result in $45 billion less in superannuation savings over the next seven years.
The hit to the system rises to $55 billion over the next seven years when the Coalition’s proposed abolition of the low income earner’s superannuation concession is taken into account, according to the ISN.
Pauline Vamos, chief executive of the Association of Superannuation Funds of Australia (ASFA) took a more conciliatory approach.
“Let’s take the politics out of super and move towards a bipartisan approach to delivering comfort and dignity to all Australians in retirement,” Ms Vamos said.
ASFA continues to support the increase of the SG to 12 per cent to provide for the comfortable retirement of all Australians, said Ms Vamos.
The industry body released a white paper last week “to start a conversation with all Australians about how they want their retirement to look in the future and the policies required to achieve it”, she added.
Finance Sector Union (FSU) national secretary Leon Carter said the deferral of the SG increase was an “attack” on the retirement savings of Australians, and would result in fewer jobs for finance workers.
“There’s too much at stake here for the superannuation increase to be derailed now,” said Mr Carter.
“Denying workers a comfortable retirement, free from financial strife, is irresponsible and ideological. Tony Abbott has demonstrated once again that he is no friend of Australian workers,” he added.
Ken Raiss, director of wealth advisory group Chan & Naylor, labelled the delay in the increase to the SG “unfortunate”, but he admitted it would give businesses a reprieve over the next two years.
“Wages, as a result, may grow quicker over the next 24 months, and with this [will come] the opportunity for Australians to consider other options for contributing more towards their super – which the future government must support,” he said.
At the other end of the spectrum, the Council of Small Business of Australia (COSBOA) publicly congratulated Mr Abbott’s announcement.
COSBOA chair Amanda Lynch said that any increase to superannuation is “actually a pay increase, which will come from the pockets of the person who owns the business”.
“We have always been concerned that the increase in superannuation guarantee from nine per cent to 12 per cent would impose more costs on small businesses and provide another drain on our confidence,” said Ms Lynch.
