Is the super system outdated?
The changing structure of the Australian workforce means that the superannuation system envisioned by Paul Keating with the super guarantee needs to modernise to better suit how people work nearly three decades later, a Mercer report released yesterday has found.
Speaking at the report’s launch, the Demographic Group’s Bernard Salt said that demographic shifts were reshaping the Australian workforce, and cultural change was needed to encourage gig workers to put super away, workers in their 40s and 50s to further train or retrain, and Millennials to engage more in their super in response to these movements.
When superannuation was introduced, for example, only 11 per cent of the population was aged over 65 and 73 per cent of workers were employed full-time. In the 2016 census however, 16 per cent of the population was over 65 and larger numbers are employed in working arrangements such as contract or part-time.
The report, which surveyed 80 executives and interviewed seven business leaders, found that 54 per cent expected to employ more contractors at the expense of permanent staff, while slightly over 60 per cent predicted an increase in part-time employees of both genders.
In the current superannuation system, these workers would largely go without superannuation guarantee payments, causing obvious concern for supporting retirees down the track.
Mercer chief executive, Ben Walsh, said that while these sorts of workers used to largely be people starting their own businesses, in which case the superannuation guarantee would have caused cashflow issues, the fact that much of the contractor workforce was now engaged in knowledge work meant that this approach needed updating.
The priorities of younger Australians when it comes to work also challenge the current superannuation system, with an increased emphasis on holding a variety of jobs meaning many had multiple super accounts.
Walsh pointed to the fact that 39 per cent of Australians have multiple super accounts, many of which he said were being diminished by fees, as one of the most startling statistics in the report.
In light of this demographic change, the report found that 36 per cent of employers believed that the super system was not suitably structured for the future workforce and 56 per cent agreed it needed adjustment.
Salt said that the push for reform could come from businesses: “I actually think the business community is ahead of society on the issue [of super reform]”, but that this thought needed to be translated into action.
AUTHOR
Hannah Wootton
Recommended for you
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
