Super deferral upsets industry
The Coalition's plan to defer an increase in the super guarantee is surprising and disappointing, executives say, reiterating their calls for stability in the $1.5 trillion sector.
Brad Cooper, chief executive of Westpac's wealth arm, BT Financial Group, said uncertainty over the rules on super added to a lack of engagement by members about their retirement savings.
John James, managing director and chairman of Vanguard Investments Australia, said the industry suffered from a lack of trust due to rule changes, needless complexity, and the financial crisis.
The Coalition last week caught the super industry off guard by saying it planned to defer the increase in compulsory superannuation to 12 per cent by two years.
The announcement followed Labor targeting high-income earners' tax concessions, measures the budget said would save about $800 million over four years.
"When the government came out with their announcements in April, I think the overriding sense from people was relief," Mr Cooper told a super industry lunch in Melbourne on Tuesday. "To be honest, I was a little surprised with the budget response."
Mr Cooper said the focus should be on ensuring that today's 45-year-olds would be able to comfortably retire in 20 years' time.
"From my perspective, that's the lens we should be having around changes to superannuation, and not the budgetary concerns or the political issues of the day," he said.
Mr James said the system was overly complex and fickle. "The confidence in the system is [an issue] we have to tackle and try and make the complex simple for them," he said.
Mr Cooper said that 12 per cent was "about the right number" for compulsory contributions, to account for people's mortgage and family commitments earlier in the working life. Former prime minister Paul Keating has long argued that 15 per cent of a person's wage should go into super, about the same as goes into federal MPs' super.
Superannuation Minister Bill Shorten said it was "time for the message to go loud and clear to the Abbott conservatives - hands off the superannuation of Australian employees, pass the increases on ... as you promised to do in February and in March".
But shadow superannuation minister Mathias Cormann has described the decision as part of the Coalition's plan to "deal with the budget emergency".
"Slowing down the rate of increase will leave people with more of their own money pre-retirement," Senator Cormann said.