The financial services industry reacted furiously on Friday morning after The Australian reported the government intended to “permanently halt” any further rises to the SG.
The Murdoch newspaper reported that the halt to further increases to the SG would “recoup billions of dollars for the federal budget” and help fund income tax cuts in a reform package to be taken to the next election.
Later on Friday, Mr Turnbull said the government had “no plans to change the rise in compulsory super”.
“We are having a very lively debate about tax and economic reform, and so all sorts of proposals are swirling around and … we are considering all of those things,” he said, speaking to reporters in Canberra.
The Association of Superannuation Funds of Australia (ASFA) said that halting scheduled increases to the SG would increase future expenditure on the age pension.
“Currently, the SG is scheduled to increase from 9.5 per cent to 10 per cent in 2021, and then incrementally up to 12 per cent by 2025,” said ASFA.
“The SG is a crucial pillar of the retirement incomes system, as it enables a significant proportion of Australians to predominantly self-fund their retirement, reducing reliance on the age pension.”
The Financial Services Council chief executive, Sally Loane, said future generations should not “bear the cost of short-term budget decisions”.
“Stopping superannuation guarantee payments at 9.5 per cent would be inconsistent with Australia’s future needs for savings,” said Ms Loane.
“It is simply too low to help the majority of Australians fund their retirement and would mean that more than 80 per cent of Australians would still be dependent on the age pension by 2050 – nearly 60 years after the introduction of compulsory superannuation.”
Industry Super Australia said that freezing the SG at 9.5 per cent could see almost $1 trillion “wiped off” national savings by 2055.
“A typical female industry super fund member, earning at most 70 per cent of average full-time wages, could expect to lose $74,293 in retirement benefits in real terms over her entire working life, if the SG were to be permanently frozen at 9.5 per cent rather than increasing to 12 per cent as currently legislated,” said the ISA.
Australian Institute of Superannuation Trustees chief executive Tom Garcia said further delays to the increase to 12 per cent would create “unnecessary uncertainty for workers and employers alike”.
“Lifting the super rate to 12 per cent is about taking the right steps now for the long-term benefit of Australia,” Mr Garcia said.
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