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October 11th, 2019
Industry Super Australia (ISA) has responded to recent media reports about how increasing the superannuation guarantee rate to 12% will affect everyday people in Australia.
The Grattan Institute published a report in July 2019, based on its own forecasting, suggesting that an increase in super would mean an average worker would be about $30,000 worse off over their lifetime as it would come at the expense of their wages.
In contrast, new analysis by ISA shows that an average worker would end up with nearly $20,000 more over their lifetime if the super guarantee goes up to 12 per cent.
ISA Chief Executive Bernie Dean said, “There is no Australian evidence to support claims there is an equivalent trade-off between wages and super. This clearly shows that if super increases, workers will end up with more money over their life – not less.”
ISA says that its researchers found that the Grattan Institute’s claims are based on “dubious assumptions”, and that there is no Australian evidence to support claims that an increase in super contributions will result in an equivalent reduction in wages.
Its modelling shows an average worker would in fact end up with $18,100 in extra income over their life, while a married couple on average full-time wages – which the Grattan Institute didn’t model as they do not analyse women or couples – would have an extra $44,300 in income over their lifetime.
For above-average earners, an increase in super contributions to 12 per cent could see a couple’s lifetime income boosted by more than $100,000.
The Grattan Institute’s modelling assumes everybody works continuously from age 30 until they retire, before dying at 92. It doesn’t take into account the three million workers who are currently working intermittently and those not receiving super, such as in casual and part-time jobs, or taking maternity leave or other career breaks.
“The claims made by the Grattan Institute are based on a fantasy world that doesn’t exist. What’s not a fantasy is the impact cutting the super increase would have on people in retirement. They would end up with less to support themselves and their family, while everyone would pay to support more people on the pension,” added Mr Dean.
For full details on this story visit the ISA website.
First Super is one of the 15 Industry SuperFunds within the Industry Super Australia collective.
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