Jane Hume, the Victorian Liberal senator and assistant minister for superannuation, financial services and financial technology, will be addressing the SuperRatings and Lonsec Awards dinner in Melbourne on October 30. She caused a stir last week when she said she “liked” a 10 per cent superannuation guarantee rate.
The SG is scheduled to rise from its current 9.5 per cent to 10 per cent by 2021. Under other changes by the previous Coalition Government, it is then scheduled to rise to 12 per cent by 2025. Various Government members, plus some cross-benchers, have expressed disquiet over whether the economy can afford the scheduled timetable for an increase.
Hume addressed a gathering of big super fund executives at an event hosted by the Australian Taxation Office earlier this month, as reported in Fairfax newspapers last week. According to the Fairfax (owned by Nine) reports, Hume “focused on the 10 per cent figure”. She said: “People can relate to $1 out of every $10 going into superannuation.” She allegedly also said her view was not an indication of an intention to stall the legislated timetable but would, rather, be “an opportunity to increase financial literacy”.
Hume will be speaking in person at the black-tie SuperRatings and Lonsec annual awards dinner, being held at the Grand Hyatt in Melbourne on October 30. Both the Prime Minister, Scott Morrison, and his Treasurer, Josh Frydenberg, have continued to express support for the current timetable for increases, notwithstanding their party-room questioning.
Kirby Rappell, executive director of SuperRatings, said last week: “I think we need to focus on the fact that, despite all the noise in the industry, outcomes for the majority of Australians have been good. Returns have been 7.3 per cent, per annum, since the introduction of compulsory SG in 1992.”
However, he added, the system continued to remain focused on accumulation and building balances, rather than on the retirement phase of people’s lives. He said: “Increasingly, the fundamental need is for funds to be more effective at retaining members into the retirement phase and helping them to improve certainty in retirement. This is a complex topic, particularly in an environment of low interest rates, as it is presenting a real challenge for retirees to retire with dignity. But this also fails to address those who never start a pension product,” he said.
“The average starting balance for a pension is around $280,000. This provides a complement to the government pension, but also fails to account for those cashing out of the system. For members aged over 60, only around 45 per cent of assets make it into a pension product.
“The rise in the guarantee rate to 12 per cent is vital to supporting improved retirement outcomes. There will no doubt be changes over time to taxation, which hopefully will support lower income earners get more value out of their contributions, but we must not miss the fundamental reality that the system does a lot of good for providing members with greater dignity in retirement but there remains a long way to go to truly achieve this and the focus must be on how we succeed here rather than chopping and changing and reducing the perceived value of the system.”