A pause in the increase of the superannuation guarantee contribution (SGC) rate is sensible within the context of a global pandemic and local recession, but this should not lead to any further moves to undermine the retirement savings system, according to Chartered Accountants Australia and New Zealand (CAANZ).
CAANZ superannuation leader Tony Negline said opposition financial services and superannuation spokesman Stephen Jones recently suggested any change to the rate at which the SGC increased would be a “broken election promise”, but the accounting body believed a temporary halt made sense at the current time.
“Since the last election, there has been a global pandemic, the first Australian recession in 29 years, our highest unemployment in 20 years, record stagnancy in wage growth and the world falling apart at the seams,” Negline said in a post on the CAANZ website.
“The thing about a game changer like a global pandemic is that it changes the game, which is why we need to call a timeout and look at the current state of play.”
He said CAANZ supported a temporary halt and its reason for doing so was related to the interplay between jobs, wages and superannuation.
“Super is a percentage of a salary and you need a job to get a salary. The priority right now should be keeping people who have them in jobs and helping the unemployed get new ones,” he said.
“The research and recent Retirement Income Review tells us very clearly that increases in employer superannuation contributions often mean employee salary and wages increase at a slower rate.
“To say that we need to increase the super rate right now while we are still navigating out of this pandemic is to focus on the very pointy end of Maslow’s hierarchy of needs, while everyone else is in survival mode.”
Despite calling for the halt, he said CAANZ was still concerned about the way superannuation is managed in Australia.
He pointed to reports that 24,000 people had accessed $500 million from superannuation in the past year for medical needs and that under early release provisions more than 3 million people had taken $36 billion out of super, while calls were also being made to allow people to access it to buy a home.
“Our super system needs protection. Some are putting it to the sword and it needs a shield, but what we can’t do is make it more generous right now,” he noted.
“We need to be making it easier, not harder, to boost the economy for businesses to invest and for jobs to be created.
“Let’s park the super increase priority to when the vaccine is rolled out and when the employment and GDP (gross domestic product) numbers look a little less like a horror show.”
