People under 50 need protection from any increase in super contributions: Policy analyst.
PEOPLE aged under 50 need protection from the proposed increase in superannuation contributions because many are under financial stress, a leading policy analyst says.
Bruce Bradbury, a senior research fellow in the Social Policy Research Centre, the University of New South Wales, said younger Australians should be able to take back the compulsory 3 per cent increase in the Superannuation Guarantee to spend on what they needed.
''The point of superannuation is to help us move resources to the retirement years when our income is low,'' he said. ''But the policy doesn't take into account the other stages in life when people also have high needs, typically when they're buying a house and having children.''
The federal government plans to gradually raise the contribution employers make to employee superannuation from 9 per cent to 12 per cent. Many academic analysts believe this will be at the expense of future wage increases.
Calculations by Dr Bradbury based on Australian Bureau of Statistics data show younger people are much more likely than the over 50s to struggle to pay bills and to save.
For example, 20 per cent of people aged under 30 could not pay a telephone, electricity or gas bill on time in the past year, and 17 per cent in their early to mid-40s also had fallen behind. But the proportion of late payers fell steeply after the mid-40s to less than 5 per cent among the 65 and older group.
In his analysis, Saving the young from superannuation, Dr Bradbury shows people in their 30s and 40s save on average only 2 per cent of their income while people in their 50s and early 60s save 10 per cent. People aged 35 to 39 actually spend more than their income.
''In their 30s and 40s people are taking time off work to care for children and they're buying a house,'' he said. ''By the time they get into their 50s and early 60s, they have surplus cash.''
Dr Bradbury said it was not practical to reduce the contribution rate for younger people. Since employer contributions were effectively incorporated into wages, this would mean different wage rates for different employees. However, one option would allow super payouts for younger people for prescribed uses, or allow them to ''take the 3 per cent out and make their own decisions''.
Frequently Asked Questions about this Article…
What change to superannuation contributions is the federal government proposing?
The federal government plans to gradually increase the compulsory employer superannuation contribution from 9% to 12% of wages — effectively a 3 percentage point rise to the Superannuation Guarantee over time.
Why do policy analysts say younger Australians need protection from higher super contributions?
Policy analyst Dr Bruce Bradbury argues many people under 50 face financial stress — paying bills, buying homes and raising children — so forcing extra money into superannuation now can worsen short‑term hardship rather than help those life‑stage needs.
How could a rise in employer super contributions affect wages and take‑home pay?
Many academic analysts, and Dr Bradbury, believe increasing employer super contributions will likely come at the expense of future wage increases because employer super is effectively part of total labour costs and wages.
What does the ABS data in Dr Bradbury’s analysis say about younger people falling behind on bills?
Based on ABS data cited by Dr Bradbury, about 20% of people under 30 couldn’t pay a phone, electricity or gas bill on time in the past year, 17% in their early to mid‑40s had similar problems, and late payments fall steeply after mid‑40s to under 5% among those aged 65 and over.
How do saving rates vary by age according to Dr Bradbury’s research?
Dr Bradbury’s analysis shows people in their 30s and 40s save on average only about 2% of their income, while people in their 50s and early 60s save around 10%. He also found those aged 35–39 on average spend more than their income.
What policy options does Dr Bradbury recommend to help younger workers if super contributions rise?
Dr Bradbury suggests allowing younger people to ‘take the 3% out’ — meaning letting them withdraw or access the extra contribution for prescribed uses — or permitting targeted super payouts for specific needs, so they can manage housing, childcare and other immediate costs.
Why does Dr Bradbury say it’s impractical to simply reduce the contribution rate for younger employees?
He argues reducing the contribution rate for younger people isn’t practical because employer super contributions are effectively built into wages, so lowering contributions for certain ages would require different wage arrangements for different employees.
What is the main takeaway from Dr Bradbury’s paper 'Saving the young from superannuation' for everyday investors?
The main message is that while superannuation aims to shift resources into retirement, policymakers should recognise younger Australians often face higher immediate financial needs — so any increases in compulsory contributions should include protections or flexible options to avoid harming those still building homes, raising families or managing short‑term cashflow.
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