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Will the superannuation guarantee increase go ahead?

Finance minister Matthias Cormann has confirmed that the increase to the super guarantee is going ahead. (Source: AAP, Getty)

Australia is recognised as having one of the best superannuation systems in the world.

Long-term plans to increase the superannuation guarantee – the percentage of your pay that goes into super, currently at 9.5 per cent – have been on the cards since 2010, but a number of voices have called for the increase to be frozen or scrapped entirely.

The super guarantee will remain at the current 9.5 per cent until rising to 10 per cent in July 2021, then it will keep increasing by 0.5 per cent every year until July 2025.

But while politicians tussle it out, new research confirms Australians do want more of their take-home wage going into their retirement nest egg.

According to a study by UMR commissioned by Industry Super, 87 per cent of Australians want the super guarantee to increase from 9.5 per cent.

Why?

Because Aussies are worried about having enough funds to retire.

According to UMR’s research, less than one in five of Aussies with a superannuation account believe they’ll have enough saved for retirement.

Only a third of Australians think they’ll get by on the government pension.

And about half of those who expect to have accumulated a nest egg over $500,000 feel confident they’ll be able to retire comfortably.

Will the super guarantee increase go ahead?

The Australian reported a handful of Liberal MPs, such as James Paterson, have broken ranks and called for the scheduled super increases to be frozen or scrapped, as reported in The Guardian.

Senator Andrew Bragg also suggested that superannuation be made voluntary, a proposal which was described by shadow treasurer Jim Chalmers as “laughable”.

A report by the Grattan Institute also argued that working Australians would be $30,000 worse off if the increases went ahead as the increase to superannuation would be offset by smaller pension payments.

But actuarial firm Rice Warner said the report was misleading, and said the issue lay with the way the pension is asset-tested rather than with the level of superannuation.

But finance minister Matthias Cormann shot down questions from the Senate about the state of the superannuation system and confirmed last Friday the super increase would go ahead.

Cormann, questioned in the Senate, was asked: “Can you rule out any changes to the timetable for the legislated increases to the superannuation guarantee?”

“Yes,” Cormann replied.

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