At the start of the twentieth century superannuation was something reserved for the executive staff of banks, insurance companies and a few other large trading corporations The expectation of ordinary wage earners was that retirement delivered a very frugal life sustained by the old age pension.
By the mid point of that century superannuation was steadily becoming more widely accessible in the workplace. It was common for many people to work for the same employer for all of their working life and industry saw it as a way of ensuring loyalty. An employee with a growing retirement nest egg was unlikely to be poached away by a competitor offering a small pay increase.
Eventually, the government became alarmed at the numbers predicted to be eligible for the aged pension as our population grew and implemented a national superannuation scheme which required employers to contribute a percentage of the wage paid into a retirement account. The aim was to have all citizens retire without need for the aged pension.
Unfortunately, there are gaping holes in this ambition. People who constantly changed jobs ended up with small amounts scattered in numerous funds with poor earning capacity. It missed the target on those who are self employed and women usually fell short of an adequate retirement because they were paid less than men, often left the workforce to have children and lived longer in old age. These shortages are expanding as we embrace the gig economy and the workforce has changed from permanent to casual employment.
The government plans to lift the employer contribution from 9% to 12% and there is a fear that this will continue the wage stagnation that is currently evident. We live in an ever changing world and this entire retirement issue needs a new planning approach if it is to avoid the same problems that are seeing many retire with insufficient savings to fund their lifestyle.
One of the deficiencies of the present system concerns our Indigenous people. Unfortunately, they do not enjoy the same longevity as out non-indigenous citizens of whom men live for 80.2 years and woman 83.4. In comparison, Aboriginal and Torres Strait islanders achieve 71.6 years for men and 75.6 for women.
Despite this shorter lifestyle, the age at which they can access their superannuation is the same for both of the indigenous and non-indigenous groupings. Given those lifetime discrepancies it would not be unreasonable to expect them to gain access earlier to compensate for the much shorter time they will experience in retirement.
Tinkering at the edges of the national retirement policy will only perpetuate the same mistakes. Now would be the right time to take it apart and reconstitute what needs to be done to take into account the changes that are taking place in employment in Australia, and that may include the tax that apply to the gig economy to compensate for the lack of money it contributes to the retirement pool.
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