Australian super funds are at war with the federal government, with the nation’s biggest superannuation lobby group launching a campaign warning voters of policies that, among other things, may require them to sell their home to fund retirement.
Industry Super Australia has opened up the war chest to fund a marketing blitz warning Australians of possible changes to their super accounts and other policy changes that may require them to work longer, sell their home or put off retirement indefinitely.
Major funds such as Australian Super, HostPlus, HESTA and Cbus are on side, as they admonish policies that will see average couples lose $170,000 in retirement savings and force them to sell the family home to fund retirement.
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The top target of their criticism is the potential scrapping of the legislated superannuation guarantee rise from 9.5 per cent to 12 per cent by 2025.
The Prime Minister and members of his government have indicated the increases will come at the expense of wages growth and there are fears it will use the pandemic as an excuse to do away with the legislated increase – the first part of which commences in July.
The Grattan Institute, the Reserve Bank and other bodies back the government’s suggestions.
On the other hand, Labor, the unions and the super funds want the higher rate to go ahead as promised, to ensure workers have adequate funds to support themselves in retirement.
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Industry Super says dumping the super guarantee will add $33 billion to the cost of the Age Pension by 2058 and will leave a 30-year-old couple $120,000 worse off in retirement, according The Age.
However, the Retirement Income Review claims the extra funds that would be gained from higher income tax rates compared to lower superannuation tax rates will benefit the bottom line.
While the government has been put on the hook already, there’s been no clear indication it actually intends to scrap the legislated rise. It can; however, be charged with ambivalence over its decision.
Assistant Minister for Superannuation Jane Hume is ‘conflicted’ about the rise and has recently called on retirees not to plan on more government support, but instead, manage their own money more efficiently and access the capital in their home in order to ensure a more comfortable retirement.
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The Industry Super campaign targets federal politicians for happily taking a “rolled gold taxpayer-funded” 15.4 per cent in superannuation but denying a rise for the general public, as well as those Coalition MPs urging the government to break its election promise to increase the super guarantee.
“It’s time for the government to leave people’s super alone,” said Industry Super Australia chief Bernie Dean.
“Some politicians think it is fine to cut super and then tell older Australians that they should sell the family home to fund a reasonable standard of living at retirement – or tell younger Australians they must sacrifice their retirement savings to buy a home.
“Our members expect us to protect their financial interests and warn them about changes that will leave them worse off at retirement and that’s exactly what this campaign will do.”
Do you think the government should scrap the super guarantee? How do you feel about using the equity in your home in order to fund your retirement?
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