Labor is right to rule out further increases in compulsory superannuation

In late 2020, the former Coalition government received the findings of the review into Australian retirement incomes, which explicitly recommended against lifting the compulsory superannuation rate to 12% because it could disadvantage low-income earners and reduce workers’ lifetime incomes:

“A rate of compulsory superannuation that would result in people having an increase in their living standards in retirement may involve an unacceptable reduction in living standards prior to retirement, particularly for lower-income earners”, the report stated. “This is based on the view, supported by the weight of evidence, that increases in the super guarantee rate result in low wages growth, and would affect living standards in working life”.

“The weight of evidence suggests the majority of increases in the super guarantee come at the expense of growth in take-home wages. The view is based on empirical research, economic theory, evidence across a number of countries and the original policy intent of superannuation guarantees”, the review stated.