The Turnbull government has committed to increasing compulsory employer-paid superannuation rates, beginning in three years’ time.
The Superannuation Guarantee will increase from 9.5% to 10% on 1 July 2021 and is scheduled to increase in 0.5% yearly increments, hitting 12% by 2025.
David Knox, a senior partner in Mercer’s Retirement, Risk and Finance business, says increasing the Superannuation Guarantee to 12% will boost Australian’s retirement savings and cut future reliance on the age pension.
“As Australians live longer, they will also draw an age pension for longer – the Government will need to spend more in pension payments,” Dr Knox says. “An increase in the Superannuation Guarantee to 12% will help to offset these increased costs.”
The Association of Superannuation Funds of Australia says increasing the Superannuation Guarantee to 12% of salary would result in half of all of Australians living comfortably in retirement by 2050, just over double the current proportion.
“This is a unique social policy achievement that we should view with pride, optimism and confidence for the future,” CEO Dr Martin Fahy says.
In 2012, the Gillard Labor government moved to incrementally increase the Superannuation Guarantee from 9% to 12% by 2019. The Abbott government froze the Superannuation Guarantee at 9.5% in 2014, where it has remained.