The " Retirement " Question ?

 More money in your pay packet now  ?   Or more in your superannuation fund to finance a better life when you retire ?   Those are the options being considered by the government as we start to emerge from a pandemic that has decimated many jobs and has yet to deliver a final jobs outcome.

Australian workers were generally overdue for a wage increase when that coronavirus roared out of China and threw the economy into a tail spin.  Industry was making record profits and we were starting to see difficulty in attracting labour but wages remained static as the promise of both automation and AI looked likely to dominate the new horizon.

At that time, the government had a plan to increase the percentage of their employees pay packet employers are obliged to pay into superannuation from the present 9.5% to 12 %.  That was naturally resisted by employers who claimed they were battling to continue to exist under the compulsory lockdowns demanded to combat this virus.

Any form of pay increase at the present time is likely to accelerate the extension of the " gig " economy in which direct employment is disguised as " self employed contractors " providing a service which deprives them of holiday pay, sickness pay and a host of other benefits.  Much of Australian industry is moving away from direct employment of permanents and filling those gaps with " hourly paid  casuals " who received a twenty-five percent pay loading to compensate them for the loss of those benefits.

The big difference is that the permanently employed work a full week, while " casuals " only work the limited hours their employer finds them necessary.  In many cases they do not earn a " living wage " and work for several employers to cover peaks in different business cycles.

Deciding whether more money goes into pay packets or superannuation seems certain to bring a fight from the Labor opposition and the unions on one hand and the giant Superannuation industry on the other, which manages and invests the funds deposited  to create the nest egg workers need when they retire.

This superannuation industry claims that the present 9.5% employer contributions do not deliver sufficient accumulation to allow the average worker to have an adequate retirement.  The obvious meat in this sandwich are the many small businesses who were forced to close their doors during the pandemic and still have not returned to profitable business levels.   They claim they can not afford either higher pay or a higher superannuation levy.

The companies that invest people's superannuation is a three trillion behemoth in the government's sights for revision.  It has many components which deliver a very satisfactory annual return, but unfortunately there are also many individual funds that perform poorly.  Retirement outcome often depends on the choice made when an employer sets up a fund initially.

This is an issue that the average worker will pursue with more than passing interest.  We all hope for a comfortable retire3ment, but that is only possible if we have an efficient superannuation investment industry and the employer contributions leave industry viable.

If the wrong decision brings a job drought it will mean many retirees have to learn to manage on the old age pension  !