That Vexing Superannuation Question !

 When superannuation became available to every permanently employed Australian by way of his or her employers contribution it was supposed to be a two way deal.   The contribution the employer made was fixed by law but it was hoped that the employed would implement their own saving plan and the two combined would deliver a nest egg that would free the retiree from having to rely on the aged pension.

In many cases, that did not happen.  The superannuation saving in most accounts was entirely the employers contribution and there was a serious doubt that the majority of retirees would have sufficient money for a self funded retirement.  As a consequence, the government intended to raise that employer contribution from the present 9.5% of the employees salary to 12%, starting in 2025. 

A lot of water has gone under the bridge since that idea was raised. An enormous number of people have been granted leave to raid their superannuation account because COVID-19 has closed their place of employment and it seems certain that we will have a big pool of unemployed people when the recovery finally gets under way.  Many former employers will fail to reopen and those that do will struggle to achieve the throughput achieved prior to the lockdown.

In the prevailing circumstances, that hike in employer contributions to their employees superannuation fund is unsustainable.  Even continuing the 9.5% contribution will be a serious hindrance to creating jobs in a depressed economy and a move is likely to methods that are less labour intensive.  The retail trade is likely to become more self service and manufacturing will embrace automation as AI develops further.

Before the coronavirus roared onto the scene we were already seeing change creeping into the employment situation. There was a serious imbalance between those working in government employ and for big corporations and those unable to find permanent work and who had gravitated to what was termed the " gig " economy.

People who drove cars for companies like Uber termed themselves " self employed " and industry embraced this concept because it freed them from many imposts, including that 9.5% superannuation contribution. We became accustomed to people having several gig economy jobs which together delivered less than the living wage. This " self employed " concept was widening and moving into many more industries.

Many low income people have now cleaned out their superannuation fund and there are insufficient work years remaining to rebuild it to self retirement level even if jobs were readily available. It is quite clear that retirement for a lot of the workforce that the government hoped would be self funded will be forced to rely on the aged pension.

Should the government persist and force that 12% superannuation dividend on employers it certainly will inhibit many from reopening and that will only further reduce employment opportunities.   That hike in contributions is simply dead in the water at this time and likely to remain so into the foreseeable future.

Time to go back to the drawing board and reexamine this whole retirement question.  When it comes to heaping the cost of superannuation payments onto employers payrolls that old adage from the days of the silk road between Asia and Europe comes to mind.   It was reputed to be the weight of that last piece of straw that broke the camel's back !