Superannuation
Dignity in retirement is paramount for people who have worked all their lives, and superannuation provides money to enable comfortable retirements.
Today every worker has the right to their own superannuation account but that right would not exist had it not been for the campaigns fought by union members from the 1960s to the 1980s.
Over twenty years ago, unions won superannuation as a right for all Australian workers and set up Industry Super Funds to look after the retirement savings of their members. Today Industry Super Funds look after the needs of more than 4.7 million Australian workers, and control assets of more than $200 billion.
Recognising that for many workers retirement incomes are still inadequate, the ACTU is campaigning for a lift in employer superannuation contributions from the current minimum of 9% — where it has been stuck since 2002 — to 12% by 2012. And then a further lift again to 15% by 2015.
Brief history
Until the early-1990s, universal or compulsory super did not exist. In 1983, only 39% of the workforce had superannuation, and total Australian superannuation assets were $50 billion. Access to super depended on age, gender, occupation, occupational status, whether you were full or part-time, permanent or casual, or a contractor.
Superannuation was deeply inequitable: less than 25% of women and blue-collar workers had an account. High income earners such as permanent public servants and full-time white-collar workers were more likely to have access to super.
Unions had begun to campaign at an industry or workplace level for super in the 1960s and 1970s. In some cases, industry funds were developed from industrial campaigns that included strike action to persuade employers to contribute.
In the early-1980s, in light of research that the taxpayer funded pension system was not sustainable to meet the needs of an ageing population, the ACTU developed strategies that led to the campaign for compulsory, universal superannuation.
The main objectives of this campaign were that super should be available to all workers, the savings would belong to workers rather than employers and was portable as they changed jobs, and that employer contributions should be preserved until retirement. Unions also wanted employee representation on super fund boards and trusts.
The provision of super came about through union-employer negotiations, and was provided by employers in place of pay rises as deferred pay.
But progress was slow until the Keating Labor Government introduced the Superannuation Guarantee in 1992. Initially it was set at 3%, phasing up to 9% by 2002.
Adequacy of superannuation
It is widely acknowledged that a compulsory savings rate of 9% Superannuation Guarantee is inadequate to fund the retirement incomes of low and middle income earners, particularly those whose working lifetime commenced prior to the SG systems.
The system will be inadequate for sections of the workforce, particularly women, casuals and part-time employees, who suffer low contribution amounts and disrupted periods of saving.
Increasing superannuation contributions in the medium term to at least 12% through bargaining and increasing the SG rate is an important part of ensuring workers have adequate retirement incomes.
It is the ACTU’s objective to lift employer superannuation contributions to 12% by 2012 and 15% by 2015.
What’s next?
Unions are opposing the push from some quarters to lift the age at which workers can access their preserved (employer contributed) superannuation savings to 67 years. This is believed to be under consideration by the Henry Review into Retirement Incomes, and is in line with recent changes to phase in a higher age pension eligibility age of 67.
The ACTU believes it would be counterproductive for the individual, society and the economy to align the Superannuation Preservation Age and the Age Pension Eligibility Age.
The Federal Government should consult widely, including with unions, about the transition to retirement so there are flexible arrangements to accommodate the wishes and capabilities of all different types of employees approaching retirement.
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