Taking away compulsory super for low income workers would not only undermine the very premise of Australia’s superannuation system, it would see vulnerable workers pay more taxes for less money at retirement.
Industry Super Australia (ISA) analysis shows that for a person on $50,000 a year, raiding their super guarantee contributions would increase their personal income tax bill by $1,710 a year – an increase of nearly $1,000 on the low tax they would otherwise pay in super.
Any claim that this would “save” $1.8 billion conveniently ignores the fact that wages are taxed at a higher rate than superannuation – meaning this would actually cost low income workers more in the long run.
This is a flawed plan that will see low income workers pay more tax for less money at retirement – while everyone will foot the bill as dependence on the pension increases.
Australia’s superannuation system was established to provide a safety net at retirement – like medicare – for those workers who need it the most.
We know that women already retire with around 40 per cent less super than men. Making super voluntary for people who earn under $50,000 a year would have a devastating impact on low income workers, and increase the gender gap even further.
ISA welcomes the commitments by the Prime Minister and the Treasurer in recent days to deliver on the legislated scheduled increase in super contributions – as promised prior to the election.
