superannuation system

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Presentation transcript:

superannuation system The Australian superannuation system Presentation to The Irish Chamber of Trade Unions Trish Curry, AustralianSuper Regional Head UK

Union stakeholder organisations

Agenda Unions and Super The Super system today The Policy debate A Proud History Campaigning for Universal super The Super system today Key statistics Default super Retirement income – lump sum v annuity The Policy debate Taxation Fairness Fund consolidation Gender Gap Agenda

The role of Trade Unions in securing universal super 2/10/2017 The role of Trade Unions in securing universal super 1980 1983 - 85 1992 1992 - 2015 < 40% working Australians had super “Prices and Incomes Accord” struck b/w Govt. and ACTU 3% super introduced in awards Creation of industry funds (IFs) Equal Representation on IF Boards SG legislation introduced SG increased from 3% to 9.50% 2015 - Increase to 12% was deferred by Abbott Govt. and will remain at 9.5% until 2021. $2 trillion in super industry by 2015 Unions helped secure superannuation for most workers in the 1980’s. In 1985 less than 40% of the workforce had super Women and blue collar workers were least likely to have super Today: - employers are required by law to contribute at least 9% of salary to super, increasing July 2013 - most awards and some EBAs contain clauses on super - about 90% of Australian workers have super - for many Australians superannuation is their largest asset after the family home. Member presentation

‘Universal’ Super Unions campaigned for a super system with these characteristics: Compulsory super for all workers 100% vesting (workers own their super) Portability (take super from job to job) Preservation (until retirement) Equal representation (as Trustees of Industry Funds) Affordable disability/death insurance within default super The main objective of the ACTU and the unions was to achieve a universal system of compulsory super, which had the following characteristics:   Super for all workers Irrespective of age, gender, occupation, industry or work pattern. Vesting Superannuation to belong to workers, so that they kept their entitlement even if they left their job prior to retirement. Portability When someone left their employer they took their super benefits with them to their next employer – assuming they worked within the same industry, it would be with the same super fund, thus “industry funds”. Preservation The purpose of super is to provide an income for retirement. It is therefore important that unless there are special circumstances (financial hardship and/or permanent disability) employer contributions should be preserved until retirement. Equal representation Unions wanted employee as well as employer representatives to act as trustees of super funds – not just employers. Insurance Unions sought insurance provisions for workers through their super fund. The principle of “deferred pay” The provision of super came about through union-employer negotiations and was provided by employers in place of pay rises. Super was therefore regarded as “deferred pay” and a “right” for workers

The Super system today 9.5% super for all workers* (on top of wages) Superannuation clause in Industrial Awards and Agreements Employer default system Choice of Fund available to most Australians ‘MySuper’ legislation introduced in 2014 to protect consumers Financial Advice Reforms (FoFA) “must operate in the best interests of members” * 9.5% super is paid to any worker who earns at least $450 in a calendar month. This equates to ~ €305pm

The retirement system today 3 Pillar system = Govt. Pension + Compulsory Super + Voluntary savings Today’s retirees have not had the benefit of super for their entire careers. This won’t occur until the 2030’s. Fully mature system will not arrive until 2060’s. 80% of retired Australians receive a full or part aged pension Lump sum v Annuity / Income Stream Research shows Australians live too frugally – scared money will run out. Research shows if you have more than $100,000 in super (~ €68,000): 25% likely to take a lump sum 75% likely to take an income stream Super is a supplement to the Aged Pension

Current Policy debate Taxation reform Super in Industrial Awards Fund consolidation Addressing the Gender gap

Unions and Industry Super changing super policy together: Improve adequacy of retirement incomes by increasing SG and negotiating EBAs beyond SG levels Reforms to taxation of super so low paid workers are treated more fairly Regulating fees and banning commissions LISC – ACTU’s successful campaign to save Low Income Super Contribution in 2014 Super for women while on maternity leave