This year’s Federal Budget has offered a welcomed focus on savings, according to consulting firm Mercer.
Although it offered little in the way of handouts, tonight’s announcements in relation to savings and financial services, build upon the earlier news that the superannuation guarantee would be gradually increased to 12 per cent, assisting 8.4 million Australians.
In response to the recommendations of the Henry Tax Review, the Government increased the level of the superannuation guarantee from 9 per cent to 12 per cent in recognition that a 9 per cent contribution level is insufficient to provide an adequate and sustainable retirement income. The three per cent increase will be in place by 1 July 2019. Furthermore, a low-income earners contribution, of up to $500 per year for workers earning up to $37,000, will also be made by the government from July 1 2012.
“Mercer is pleased to see a Federal budget that further encourages savings, both inside and outside of superannuation,” said David Anderson, managing director & market leader for Mercer. “The tax discount on certain interest bearing products gives greater focus to savings. This initiative can be built upon in future years and could help to create a savings culture, in particular amongst younger people.”
Tim Jenkins at Mercer believes the role of the employer has changed from superannuation plan sponsor to superannuation facilitator.
“Whereas 5 to 10 years ago many employers operated their own stand-alone corporate superannuation fund, this is now very much the exception, as a combination of less and less differentiation of benefit levels, onerous levels of compliance and regulation, and the need for scale, has led to the wind-up of these plans, and the greater use of master trust plans and industry funds,” he said.
Jenkins said that for the majority of Australian HR professionals, their involvement in superannuation has moved from running the company superannuation plan (often working closely with Finance), to more limiting roles such as; making sure the employer meets its SG obligations and facilitating and directing employees to the best sources for answering their superannuation questions.