Coalition keeps super rise

Opposition dumps plan to rescind superannuation boost from 9 per cent to 12 per cent.

By InvestSMART · 6 Nov 2011

By InvestSMART ·
6 Nov 2011

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Opposition dumps plan to rescind superannuation boost from 9 per cent to 12 per cent.

THE Coalition will not roll back superannuation increases for workers which Labor has tied to the mining tax.

The Sunday Age can reveal the Coalition has dumped its plan to rescind the superannuation boost from 9 per cent to 12 per cent by 2020, after a meeting of senior leadership figures on Friday.

Instead it will keep the laws if it wins office. ''Essentially this is a fight we don't want to pick,'' a source said.

The decision was taken at a meeting involving Opposition Leader Tony Abbott, deputy leader Julie Bishop, Nationals Leader Warren Truss, Shadow Treasurer Joe Hockey, Manager of Opposition Business Christopher Pyne and shadow assistant treasurer Mathias Cormann.

Only last week Senator Cormann had reaffirmed the Coalition's plan to rescind the super increases if it won office as part of an austerity drive.

Super will increase to 9.25 per cent in 2013-14 at a cost of $240 million, growing to $3.6 billion a year by 2020 once the full 12 per cent is reached.

Last week the Assistant Treasurer, Bill Shorten, said the Coalition would have ''rocks in its head'' to claw back retirement savings from 8.5 million people, especially when politicians receive 15 per cent superannuation.

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Frequently Asked Questions about this Article…

What did the Coalition decide about the planned superannuation increase?

The Coalition has dropped its plan to rescind the planned increase in compulsory superannuation and will keep the laws that raise super if it wins office, after a meeting of senior party figures.

How much will superannuation contributions rise and by when?

Under the current laws, employer superannuation will rise to 9.25% in 2013–14 and is scheduled to reach a full 12% by 2020.

Is the superannuation rise linked to the mining tax in this debate?

Yes. The article notes that Labor has tied the superannuation increases to the mining tax, and the Coalition has decided not to roll back those increases.

What is the budget impact of the superannuation increases?

The increase to 9.25% in 2013–14 is estimated to cost $240 million, growing to about $3.6 billion a year by 2020 once the full 12% is reached.

Who was involved in the Coalition's decision on the superannuation policy?

The decision was taken after a meeting that included Opposition Leader Tony Abbott, deputy leader Julie Bishop, Nationals Leader Warren Truss, Shadow Treasurer Joe Hockey, Manager of Opposition Business Christopher Pyne and shadow assistant treasurer Mathias Cormann.

Why did the Coalition abandon plans to claw back the super increase?

According to a source quoted in the article, the Coalition judged it was a fight they did not want to pick; following senior leadership discussions they chose to keep the existing super increase laws if they win government.

What criticism did Labor make about the idea of rescinding super increases?

Assistant Treasurer Bill Shorten said the Coalition would have 'rocks in its head' to claw back retirement savings from 8.5 million people, pointing out that politicians themselves receive 15% superannuation.

What does this decision mean for everyday investors and workers' retirement savings?

For everyday workers, the Coalition's decision means the planned rise in compulsory super contributions is set to remain on track—moving to 9.25% in 2013–14 and toward 12% by 2020—so employer contributions to retirement savings should increase as the law phases in.