Australians have good reason to be hopeful of a well-funded retirement thanks to legislated superannuation increases.
However, some federal politicians have hinted at reneging on the promises they made to raise super contributions over the coming years from 9.5 per cent to 12 per cent in 2025.
Some MPs have thrown doubt on the plans that would see Australians boost their nest eggs. Spooked by the pandemic and its impacts on the economy, they have threatened to ditch or delay the super increase.
But research shows fears of a disadvantaged economy are flawed. Superannuation funds collectively benefit Australia’s economy by creating more jobs and spurring on wage growth.
A report by economic experts at ACIL Allen shows the legislated super guarantee increase will inject an extra $12 billion into the economy and create more than 10,000 jobs.
The findings highlight the importance of super investment in Australia’s future and stamp out claims of it not making an impactful contribution to the broader community.
“This report dispels the myth that once money goes into super it disappears into thin air and does not make a contribution to the economy,” said Greg Combet, chair of Industry Super Australia.
“We know that’s not the case and the pool of patient capital has a positive and lasting impact on employment, wages and economic growth.
“The consequences of cutting super are crystal clear – it leads to permanently slashed wages, jobs lost, and the economy crimped all while adding to the aged pension and leaving Australians far worse off in retirement.”
Increasing the super guarantee will funnel more money into capital to expand the economy, which means more demand for labour and in turn, drive wage growth.
While the report shows job and wage growth might initially slow, it will soon gather pace as investment increases in the wake of economic growth – leading to long-term real wages growth.
This means more money flowing to workers in the medium and long-term, and with the super increase, it means a more comfortable retirement.
Find out more about the super guarantee.
Greg Combet is the Chair of Industry Super Holdings and The New Daily is owned by Industry Super Holdings.
See www.industrysuper.com/assumptions for more details about modelling calculations and assumptions. Consider a fund’s Product Disclosure Statement (PDS) and your personal financial situation, needs or objectives, which are not accounted for in this information, before making an investment decision.
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