Australians risk losing hundreds of thousands in retirement income under Coalition super proposal   :(
January 16, 2025 ACTU.
The ACTU warns that the current push by Coalition members to cut superannuation will cost the average 30-year-old worker around $165,000 in retirement income.

Key Coalition members, including Alex Antic, Matt Canavan and Llew O’Brien, have voiced support for cutting the superannuation guarantee rate from 12 per cent to 9 per cent if the Coalition wins the upcoming election.

The reduction of 3 per cent in compulsory employer-paid superannuation, with the accompanying decline in compounding returns, will mean that the average 30-year-old worker today will lose around $165,000 in retirement income, according to ACTU estimates.

The Coalition members’ reported comments raise questions about how far the Coalition will go to undermine the hard-won entitlements of Australian workers.

In a Sydney University speech in October last year, Shadow Treasurer Angus Taylor stated that the Coalition’s ambition included “aligning superannuation with other global retirement schemes – like [the United States of America’s] 401k.”

Australia’s superannuation system is consistently ranked one of the best in the world and allows Australians to retire with significantly more retirement income than the mediocre US system provides.

Quotes attributable to ACTU Assistant Secretary, Joseph Mitchell:

“Working Australians can’t afford to lose $165,000 or more in retirement income. Super is a workplace right and should be protected, not attacked by out-of-touch politicians.

“The Coalition members suggesting a reduction in the superannuation guarantee are very happy to continue to receive 15.4 per cent superannuation for their own retirements. The Coalition’s hypocrisy is unbelievable – they want to enjoy the benefits of super for themselves while robbing working people of it.

“The last time the Coalition were in power, they froze super and forced people to raid their super to get by in a pandemic. Now, they’re talking about cutting super and getting workers to raid what’s left for more expensive houses.

“It’s clear that working people’s wages and retirement savings are at risk under Peter Dutton.

“Working people, through their unions, built a world-class superannuation system. We will defend super for future generations because every worker deserves a comfortable and dignified retirement.”

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The reduction of 3 per cent in compulsory employer-paid superannuation

Great idea. Compulsory super is a huge waste of money. The compliance paperwork alone costs each worker at least $1000 a year, and that's if you go with the cheapest option available and do all the investing and most of the paperwork yourself. On top of that, they pay a huge amount of additional interest on their mortgage because they do not have access to their own income.

It should not be compulsory

If they reduce the compulsory element then the voluntary pre-tax contribution threshold should be increased by that much or more.
A certain compulsory component (compulsory savings, effectively, with compound interest, the eighth wonder of the world, according to Einstein) is a good idea but people should also have a greater ability/incentive to calibrate their own contributions as it suits them.

Some sectors have different rates of employer contribution super, negotiated by their unions, typically in the public sector. Universities pay 17% , public service 15.4%. Plus the compulsory employee contribution.

Quote:

A certain compulsory component (compulsory savings, effectively, with compound interest, the eighth wonder of the world, according to Einstein) is a good idea

If there is a small compulsory component, you will end up losing most of your earnings to compliance administration costs. People can still earn compound interest without being forced to by the government.

freediver wrote on Jan 17^th, 2025 at 9:52am:

Quote: A certain compulsory component (compulsory savings, effectively, with compound interest, the eighth wonder of the world, according to Einstein) is a good idea If there is a small compulsory component, you will end up losing most of your earnings to compliance administration costs. People can still earn compound interest without being forced to by the government.

Where? Banks have admin fees.

Frank wrote on Jan 17^th, 2025 at 11:09am:

freediver wrote on Jan 17th, 2025 at 9:52am: Quote: A certain compulsory component (compulsory savings, effectively, with compound interest, the eighth wonder of the world, according to Einstein) is a good idea If there is a small compulsory component, you will end up losing most of your earnings to compliance administration costs. People can still earn compound interest without being forced to by the government. Where? Banks have admin fees.

The cheapest option I am aware of is esuperfund. It costs $1000 in admin fees each year. You have to manage the investments, and collect and submit all the tax related paperwork to their system. You can invest in shares, managed funds, bitcoin, fixed interest etc. 

Most other super fund managers charge several times that amount. But it is generally taken as a percentage of your balance, so they do not wipe out the small investors.

Look at your super paperwork. It might be somewhat hidden, but there are generally fees there that you would not be paying if you invested the money the same way outside of super.

freediver wrote on Jan 17^th, 2025 at 11:20am:

Frank wrote on Jan 17th, 2025 at 11:09am: freediver wrote on Jan 17th, 2025 at 9:52am: Quote: A certain compulsory component (compulsory savings, effectively, with compound interest, the eighth wonder of the world, according to Einstein) is a good idea If there is a small compulsory component, you will end up losing most of your earnings to compliance administration costs. People can still earn compound interest without being forced to by the government. Where? Banks have admin fees. The cheapest option I am aware of is esuperfund. It costs $1000 in admin fees each year. You have to manage the investments, and collect and submit all the tax related paperwork to their system. You can invest in shares, managed funds, bitcoin, fixed interest etc.  Most other super fund managers charge several times that amount. But it is generally taken as a percentage of your balance, so they do not wipe out the small investors. Look at your super paperwork. It might be somewhat hidden, but there are generally fees there that you would not be paying if you invested the money the same way outside of super.

My admin fee at Unisuper is $48 for the financial year, so probably $100 for the whole 12 months. If there are hidden fees they are well hidden.

Admittedly, I cannot control particular investments in particular companies but can and do choose between various safe- balanced- growth- high growth - green - cash etc mixes. 

Quote:

My admin fee at Unisuper is $48 for the financial year, so probably $100 for the whole 12 months. If there are hidden fees they are well hidden.

You probably just have to read the fine print. Also, the financial year is 12 months long.


Quote:

Admittedly, I cannot control particular investments in particular companies but can and do choose between various safe- balanced- growth- high growth - green - cash etc mixes.

This probably costs you even more.

Unisuper was one of the better ones last time I checked though.

All super is a scam!

If Duddo and dud team cut compulsory super by 3% and the workers receive that 3% via wages I’m all for it!

However I suspect once the employee cuts that 3% it will remain in profits and the employees are actually having their wages go backwards?

Please correct me if I’m wrong?

Daves2017 wrote on Jan 17^th, 2025 at 2:38pm:

All super is a scam! If Duddo and dud team cut compulsory super by 3% and the workers receive that 3% via wages I’m all for it! However I suspect once the employee cuts that 3% it will remain in profits and the employees are actually having their wages go backwards? Please correct me if I’m wrong?

You are wrong. The market determines your salary. Unless you are on minimum wages, in which case the unions will probably use it to justify an increase, although I doubt they were offering to accept a cut when super came in. They saw it as free money.

The market determines your total salary, including super. For most people, salary will inevitably go up to reflect the lower cost of employing people. It might even reduce unemployment.

freediver wrote on Jan 17^th, 2025 at 4:10pm:

Daves2017 wrote on Jan 17th, 2025 at 2:38pm: All super is a scam! If Duddo and dud team cut compulsory super by 3% and the workers receive that 3% via wages I’m all for it! However I suspect once the employee cuts that 3% it will remain in profits and the employees are actually having their wages go backwards? Please correct me if I’m wrong? You are wrong. The market determines your salary. Unless you are on minimum wages, in which case the unions will probably use it to justify an increase, although I doubt they were offering to accept a cut when super came in. They saw it as free money. The market determines your total salary, including super. For most people, salary will inevitably go up to reflect the lower cost of employing people. It might even reduce unemployment.

Productivity.

In 2022, the average labour productivity in OECD countries stood at $67.5 per hour. Ireland and Norway stand out with the highest productivity levels, exceeding $160 per hour, more than double the OECD average.
Denmark, Switzerland, Luxembourg, Belgium, = above $100.

Australia= $79


NZ = $54
Mexico =$24.

https://qery.no/highest-and-lowest-productivity-levels-in-oecd-countries-in-2022/

freediver wrote on Jan 17^th, 2025 at 4:10pm:

Daves2017 wrote on Jan 17th, 2025 at 2:38pm: All super is a scam! If Duddo and dud team cut compulsory super by 3% and the workers receive that 3% via wages I’m all for it! However I suspect once the employee cuts that 3% it will remain in profits and the employees are actually having their wages go backwards? Please correct me if I’m wrong? You are wrong. The market determines your salary. Unless you are on minimum wages, in which case the unions will probably use it to justify an increase, although I doubt they were offering to accept a cut when super came in. They saw it as free money. The market determines your total salary, including super. For most people, salary will inevitably go up to reflect the lower cost of employing people. It might even reduce unemployment.

freediver wrote on Jan 17^th, 2025 at 4:10pm:

Daves2017 wrote on Jan 17th, 2025 at 2:38pm: All super is a scam! If Duddo and dud team cut compulsory super by 3% and the workers receive that 3% via wages I’m all for it! However I suspect once the employee cuts that 3% it will remain in profits and the employees are actually having their wages go backwards? Please correct me if I’m wrong? You are wrong. The market determines your salary. Unless you are on minimum wages, in which case the unions will probably use it to justify an increase, although I doubt they were offering to accept a cut when super came in. They saw it as free money. The market determines your total salary, including super. For most people, salary will inevitably go up to reflect the lower cost of employing people. It might even reduce unemployment.

Productivity.

In 2022, the average labour productivity in OECD countries stood at $67.5 per hour. Ireland and Norway stand out with the highest productivity levels, exceeding $160 per hour, more than double the OECD average.
Denmark, Switzerland, Luxembourg, Belgium, = above $100.

Australia= $79


NZ = $54
Mexico =$24.

https://qery.no/highest-and-lowest-productivity-levels-in-oecd-countries-in-2022/

Are you trying to make a point Frank?

freediver wrote on Jan 17^th, 2025 at 12:11pm:

Quote: My admin fee at Unisuper is $48 for the financial year, so probably $100 for the whole 12 months. If there are hidden fees they are well hidden. You probably just have to read the fine print. Also, the financial year is 12 months long. [quote]Admittedly, I cannot control particular investments in particular companies but can and do choose between various safe- balanced- growth- high growth - green - cash etc mixes.

This probably costs you even more.

Unisuper was one of the better ones last time I checked though.[/quote]


Dear FD,
it was inevitable that when someone else is "looking after" your money
that a certain amount of it would disappear.
The Govt too has its greedy eyes on all of it -
always thinking of new ways to get some too.

That's true Bobby, but the same thing happens outside of super. The difference with super is that there is a lot of additional costs associated with compliance. Only some of this is on the government side. A lot of it is accountants and pen pushers in the fund managers filling out paperwork.

freediver wrote on Jan 18^th, 2025 at 10:44am:

That's true Bobby, but the same thing happens outside of super. The difference with super is that there is a lot of additional costs associated with compliance. Only some of this is on the government side. A lot of it is accountants and pen pushers in the fund managers filling out paperwork.

Just feel lucky if you can get 90% of your money back.

freediver wrote on Jan 17^th, 2025 at 8:15am:

Quote: The reduction of 3 per cent in compulsory employer-paid superannuation Great idea. Compulsory super is a huge waste of money. The compliance paperwork alone costs each worker at least $1000 a year, and that's if you go with the cheapest option available and do all the investing and most of the paperwork yourself. On top of that, they pay a huge amount of additional interest on their mortgage because they do not have access to their own income.

Quote:

The compliance paperwork alone costs each worker at least $1000 a year

The difference in compliance effort or costs between 9% and 12% is zero.


Quote:

they pay a huge amount of additional interest on their mortgage

Removing 3% from peoples super and giving it to the employer has no impact on mortgages at all it just takes around $165,000 out of their retirement income with zero pay back or advantage of any type.

Quote:

Removing 3% from peoples super and giving it to the employer has no impact on mortgages at all it just takes around $165,000 out of their retirement income with zero pay back or advantage of any type.

Super does not come out of your employers pocket. It comes out of your pocket. Companies did not take the 10% super out of their profits as an act of charity. Only fools think super is free money.


Quote:

The difference in compliance effort or costs between 9% and 12% is zero.

Incorrect.

Also, what about the losses incurred because you have to spend an extra 10 years paying off your mortgage because the government does not allow you to access your own income? Or because you have less choice in how you manage your finances?

The concept of the Superannuation Industry was to create a new industry that created more jobs in the face of higher unemployment.
It worked. The Public paid for it.

If something like a massive Economic collapse happens, like the Great Depression. Everyone will lose their Supers in a nano second.

freediver wrote on Jan 18^th, 2025 at 10:26am:

Are you trying to make a point Frank?

Yes.
Wages are related to productivity.
Savings are related to wages.

Frank wrote on Jan 18^th, 2025 at 1:04pm:

freediver wrote on Jan 18th, 2025 at 10:26am: Are you trying to make a point Frank? Yes. Wages are related to productivity. Savings are related to wages.

Of course it is related. By definition. Wages are one way of measuring productivity.

Jasin wrote on Jan 18^th, 2025 at 12:56pm:

The concept of the Superannuation Industry was to create a new industry that created more jobs in the face of higher unemployment. It worked. The Public paid for it. If something like a massive Economic collapse happens, like the Great Depression. Everyone will lose their Supers in a nano second.

What if all your super is in the bank ?  -

you hold no shares etc.

“The Coalition members suggesting a reduction in the superannuation guarantee are very happy to continue to receive 15.4 per cent superannuation for their own retirements. The Coalition’s hypocrisy is unbelievable – they want to enjoy the benefits of super for themselves while robbing working people of it.   :(

freediver wrote on Jan 18^th, 2025 at 12:47pm:

Quote: Removing 3% from peoples super and giving it to the employer has no impact on mortgages at all it just takes around $165,000 out of their retirement income with zero pay back or advantage of any type. Super does not come out of your employers pocket. It comes out of your pocket. Companies did not take the 10% super out of their profits as an act of charity. Only fools think super is free money. [quote]The difference in compliance effort or costs between 9% and 12% is zero.

Incorrect.

Also, what about the losses incurred because you have to spend an extra 10 years paying off your mortgage because the government does not allow you to access your own income? Or because you have less choice in how you manage your finances?[/quote]

You a naive enough to believe that when the business stops paying 3% into super that they will just give it to you. That is a million to one mugs bet. They will put everyone's 3% straight into their own pockets.


Quote:

you have to spend an extra 10 years paying off your mortgage

The employer keeping an extra 3% of your super does not have an impact on your mortgage.

Super paying home loans is a different policy and losing 3% of super makes it more difficult not easier.

If super is allowed to be used for buying houses then the prices will go up -
so no one will be better off except the sellers.
It's all about supply and demand.
With Labor bringing in millions of immigrants when there is nowhere to live creates huge demand.

Quote:

You a naive enough to believe that when the business stops paying 3% into super that they will just give it to you. That is a million to one mugs bet.

Eventually, they will have to. Remember, market forces determine your salary.


Quote:

It's all about supply and demand.

Duh. And if every other employer in town can suddenly afford to pay their staff 3% more while you pocket the difference, what do you think will happen?

Do you think that employers donated the 10% to you out of some kind of charity, or do you think it came out of your salary?


Bobby. wrote on Jan 18^th, 2025 at 1:11pm:

Jasin wrote on Jan 18th, 2025 at 12:56pm: The concept of the Superannuation Industry was to create a new industry that created more jobs in the face of higher unemployment. It worked. The Public paid for it. If something like a massive Economic collapse happens, like the Great Depression. Everyone will lose their Supers in a nano second. What if all your super is in the bank ?  - you hold no shares etc.

You still have to do the compliance paperwork Bobby. Or rather, someone else does it for you and takes it out of your super balance.

And you still have to pay off your mortgage while you have a pile of money sitting in the bank doing nothing.

whiteknight wrote on Jan 18^th, 2025 at 1:35pm:

“The Coalition members suggesting a reduction in the superannuation guarantee are very happy to continue to receive 15.4 per cent superannuation for their own retirements. The Coalition’s hypocrisy is unbelievable – they want to enjoy the benefits of super for themselves while robbing working people of it.   :(

You can voluntarily contribute 15.4% of your income to super. The before tax cap is $30k p.a. that means you can save an additional $30 And pay only 15% tax on it, instead of 30% or more.