Government pledges to boost retirement savings

The government is ramping up its focus on retirement income in the lead-in to next year’s election.

Fresh from leaking information of a cut in the interest rate for the revamped ‘pension loans scheme’, the government has also committed to increasing the retirement savings of all workers by pledging not to tinker with the legislated rise in superannuation rates.

Superannuation minister Jane Hume announced at an Industry Super Australia event on Wednesday that the government had no plans to tinker with the commitment to lift the super guarantee rate to 12 per cent by 2025.

Read: The common investment putting retirements at risk

The legislated changes include lifting the current rate 0.5 per cent every year until it reaches the 12 per cent mark.

The government had previously stalled these legislated increases, until finally allowing the first of these changes to go through this year.

Senator Hume said there would be no further delays in the increases and also ruled out making parts of them optional for workers, something the Coalition had discussed in the lead-up to this year’s increase.

Read: Government warns super funds about charging new fees

Labor superannuation spokesman Stephen Jones, who was also at the Industry Super event, said that if elected the ALP would also not unpick the superannuation increase and acknowledged the need to stop tinkering with the super system’s fundamentals.

Mr Jones also praised the performance of the super system for easing the burden on governments to fund the retirements of many Australians.

He said that although the government spent almost $60 billion on the pension and related payments, superannuants took $110 billion out of their funds each year.

Read: PM wants to use your home to rescue retirement income

Industry Super Australia chief executive Bernie Dean welcomed the commitment from both major parties to lift the super guarantee to 12 per cent by 2025.

“We welcome the minister giving an ironclad commitment that a re-elected Coalition government would not alter the super guarantee increase in any way,” Mr Dean said.

He also supported a Labor proposal to link super fund capital with government projects.

Mr Jones said that Labor’s plan involved the federal government setting up a structure to facilitate the investment of super savings into interstate transport links.

“Labor’s proposal to unlock further super fund investment in Australian infrastructure projects provides an opportunity for partnerships that will grow members’ retirement savings while helping the economy,” Mr Dean said.

Mr Dean said he also looked forward to legislation being enacted next year that would remove the $450 threshold for when super is not paid if a worker earns less than that in a month, as it had strong bipartisan support and would go a long way to addressing gender equity issues.

Are you reassured by the bipartisan commitment to the increase in the superannuation guarantee? Do you think the government can be taken at its word on these commitments, given how long it stalled these increases previously? Why not share your thoughts in the comments section below?

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Ben Hocking
Ben Hocking
Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.
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