Employers and super funds join call for higher super contributions
New Russell survey shows 86 per cent of Australian super funds and employers support a Super Guarantee contribution hike
SYDNEY, 26 February 2008 – Helping Australians achieve adequate retirement benefits should be the highest superannuation priority for the Rudd Government, according to a new 'Russell Pulse' survey of Australia's largest employers and superannuation funds.
However, Russell has called on employers and superfunds not to wait for the Government to act – encouraging the super industry and individuals to take control of their own destiny when it comes to planning a comfortable retirement.
Conducted in January 2008, the 'Russell Pulse' survey asked Australian employers and super funds what the superannuation priorities should be for the new Labor Government. Respondents represented over 1 million super fund members and more than $75 billion in super assets1.
An overwhelming 86 per cent of respondents believe the current 9 per cent Superannuation Guarantee minimum should increase. Almost all respondents said that employees should meet a share of any increase with 62 per cent suggesting a sharing of the cost between employers and employees.
Linda Elkins, Managing Director of Russell Superannuation, said the looming retirement shortfall was a critical issue for all Australians. However many employers and super funds are already working towards improving people’s super balances.
“Many of the employers we work with already actively support their employees by paying more than the 9 per cent Super Guarantee minimum. In some cases they will match contributions paid by their employees, providing a great opportunity for forward thinking employers to partner with their workforce in creating better retirement incomes,” Ms Elkins said.
Steve Schubert, one of Australia’s leading actuaries and Director of Russell Superannuation, warned that as the workforce ages, employers will find it harder to attract and retain key staff. Like healthcare in the US, he predicts super will become a key bargaining element of total employee packages.
“Employers across Australia are already suffering heavily from an undersupply of skilled workers. The Government’s own projections show that the Australian workforce will peak and then level out over the next 15 years. Smart employers are using superannuation to differentiate themselves to attract and retain staff,” Schubert said.
Key Russell Pulse findings
The 'Russell Pulse' survey asked by how much the Super Guarantee should rise. Significantly, 48 per cent of respondents proposed an increase to between 13 per cent and 15 per cent of pay, with 38 per cent suggesting 10 per cent to 12 per cent as the preferred number. Only 14 per cent of those surveyed believe the current 9 per cent is sufficient as a compulsory amount.
The need for a greater focus on adequacy also came through in a question which asked if the Government should continue with the reform of super taxes. The majority of respondents called for increasing support for low income earners through contribution tax reductions for low earners (52 per cent) or increases to the co-contribution (21 per cent).
In another strong theme, the regulation of super funds was targeted with 76 per cent of respondents throwing their support behind proposals for a single, “Super-Regulator”, to take over the superannuation responsibilities of APRA, ASIC and the ATO. In addition, respondents want the Government to generally ease the compliance burden on funds and simplify disclosure requirements – something the Government has announced its intention to tackle through the newly formed Financial Services Working Group.
Other areas flagged by super practitioners include addressing conflicts of interest in advice to members; consolidation of multiple member accounts (already highlighted as a priority by Senator Sherry); and regulation of fees and charges.
“Russell’s role has been to help raise awareness with members of the value and importance of making voluntary super contributions – and we’re finding there’s more than one way to skin this cat,” Ms Elkins said.
“Rather than always focusing on the types of assets people invest in, a significant part of our member education and seminar program is to help members understand and use the incentives available to them – whether that be the Government co-contribution, salary sacrifice or employer matching.”
For one large employer Russell recently conducted a campaign to raise awareness of the opportunities to use superannuation more tax effectively. For another, they designed a program to make it easier for employees to opt-in to the company’s generous contribution matching arrangements.
But Elkins warned fund members should not assume that the statutory minimum for super will be increased. “Our strong message to members is – don’t wait for Governments to act, you need to take control of you own destiny in retirement.”
1This number is based on data from the participating super funds and the ASFA Research Centre
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