Increasing the superannuation guarantee (SG) to 12% will leave the average worker with an extra $18,100, not $30,000 worse off as the Grattan Institute had claimed, Industry Super Australia (ISA) has argued.
ISA hit back at the Grattan Institute’s claim stating it was ‘flawed and misleading’ as its own analysis found workers would end up with $50,000 more than the Grattan modelling.
ISA said that a married couple on average full-time wages would have an extra $44,300 in income over their lifetime, and extra $100,000 for above-average earners. It noted that the Grattan model did not analyse women or couples.
ISA chief executive, Bernie Dean, said: “The claims made by the Grattan Institute are based on a fantasy world that doesn’t exist.
“What’s not a fantasy is the impact cutting the super increase would have on people in retirement. They would end up with less to support themselves and their family, while everyone would pay to support more people on the pension.
“There is no Australian evidence to support claims there is an equivalent trade-off between wages and super. This clearly shows that if super increases, workers will end up with more money over their life – not less.”
ISA also said that the Grattan model that claimed an increase in super contributions would result in an equivalent reduction in wages was also false, and the potential effect was less than 1%.
“There is no demonstrated equivalent trade-off between super and wages, and the small potential reduction that could exist is readily offset by the greater compound interest that will be earned on increased super contributions, which will result in much higher incomes in retirement,” ISA said.
“Any small potential impact on wages would be further offset by increases in the amount of personal tax paid – because super is taxed less than wages – and the impact it would have on family tax benefits, making very little difference to a person’s working life income.
“This means workers will end up benefitting from a bigger total remuneration package than they would without the increase.”