On February 2, 2020, The Grattan Institute, a Melbourne-based think tank, published a paper arguing that nationwide superannuation increases may actually be a negative for workers and that planned rate increases should be abandoned. The report was met with criticism but members of the superannuation industry, per reporting from SmartCompany.
The institute believes that workers ultimately lose money with higher payments, as a result of lower wages or overall company profits. In many cases, high superannuation rates may lead to wage stagnation because they increase the overall cost of hiring for businesses, the report argues.
For its investigation, Grattan analysed 80,000 federal work agreements that were created between 1991 and 2018.
“This trade-off between more superannuation in retirement but lower living standards while working isn’t worth it for most Australians,” said Brendan Coates, director of Grattan’s household finance program, in a statement accompanying the study.
Grattan’s findings were met with some pushback from a number of experts and officials in the superannuation industry. Bernie Dean, an executive at Industry Super Australia, argued that, among other problems, the report didn’t properly account for Australians who were self-employed or who had taken periods of time away from the workforce.
“Grattan came to this flawed conclusion last year, and have now come back with cherry-picked information ” Dean said, according to SmartCompany.
A growing industry
The Grattan report comes as the Australian government plans to increase compulsory superannuation contributions from employers to 12% by 2025. Guaranteed payments from employers currently stand at a 9.5% rate.
Superannuation is one of the largest financial industries in Australia. According to Small Caps, the superannuation sector in the country is currently valued at $2.7 trillion, and will most likely grow to reach $4.8 trillion over the next 15 years.
As legal requirements for employers continue to change in Australia, it’s important to be sure that you’re being insured properly. If you have a claim to money that your employer owes you, the experienced team at Gerard Malouf and Partners can help. We have 35 years of experience with insurance and look forward to adding your case to our list of successes. We do many of our cases on a “No Win No Fee” basis because of our confidence in success. Talk to one of our superannuation lawyers today.