ASFA Propose Increase in Super Guarantee to 12%

ASFA Media release 12 January 2010

ASFA – the Voice of Super today called on the Federal Government to increase the Superannuation Guarantee (SG) for all Australian workers to 12 percent as it frames the next Budget, due to be handed down in May.

“Whatever the findings or recommendations from the Henry Review, it is ASFA’s position that SG should be raised to 12 percent this year,” ASFA CEO Pauline Vamos said.

“The Henry Review has the potential to significantly alter Australia’s taxation framework. We look forward to a broad and inclusive discussion on its findings. Providing stability and certainty for the Australian people, for
what is generally their second most important financial asset after the family home, should be paramount.

“It is vital that the government ends speculation about possible changes to taxation that may impact superannuation. At the same time, we believe the government needs to act promptly to address adequacy in retirement issues.

ASFA has recommended that:

* Additional contribution of 3% of salary be introduced, taking total superannuation contributions to 12%.
* A compulsory contribution is gradually introduced for self employed people:
o starting at 1% of taxable income in 2010-11 and
o rising to 9% of taxable income in 2018-19.
* That the $450 a month earnings threshold for receipt of compulsory contributions be substantially reduced or abolished
* The current superannuation co-contribution be enhanced to assist a more equitable tax treatment for low income earners.

“2009 was a challenging year for superannuation fund members given volatility in investment returns and continuing speculation about possible tax changes.” Ms Vamos said.

“2010 has started on a positive note. According to superannuation ratings agencies, many balanced fund members have received double digit investment returns (just over 10%) since July 1 last year and returns of around 3% over the 12 months to January 2010.

In 2009 ASFA embarked on a campaign of extensive consultation with key community stakeholders including superannuation fund members, consumer groups, business and the trade union movement. These stakeholders expressed significant support for ASFA’s campaign to strengthen the position of superannuation as the premier retirement savings vehicle for Australian workers.

“The Federal Government must demonstrate its commitment to enhancing retirement incomes for Australian workers by finalising the inquiries and reviews it has in place, raising the level of SG and extending compulsory superannuation to a greater proportion of the workforce.”

ASFA is the peak industry body for the entire superannuation sector. It is the only industry body that represents all types of superannuation funds, service providers and fund members.

(Source: ASFA Media release 12 January 2010)

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