Unions deliver Super benefits
On July 1 2002, employers' contributions to employee superannuation will rise to 9%. This means all employees are entitled as a right to a minimum 9% contribution to be made by their employer to their fund.
The release of recent census data brought home the reality of an ageing Australian population as the median age moved to 35 from a low of 22 some 80 years ago. Coupled with the huge advances in medicine and health sciences, we can safely say that large numbers of workers will be retiring sooner and living longer after retirement.
It has been unions who have led the charge for workers to be able to access and participate in superannuation. This has been done to ensure workers can properly enjoy their retirement by being financially secure.
Prior to the involvement of the unions, decent superannuation was effectively out of reach of most working people and, before union sponsored industry funds, superannuation was very different.
Funds only promised a decent benefit if an employee reached retirement age following long service with a single employer (say 35-40 years). There was no portability and if you moved from one job to another you lost all credits and had to start all over again. That is if the new employer let you join a fund at all.
The National Union of Workers was the first union to establish a superannuation fund for its members when it established the Labour Union Co-Operative Retirement Fund in 1978 (LUCRF).
Industry funds, such as LUCRF, allow workers portability, ensure big finance companies don't eat up workers' entitlements through fees, and allow workers to have a say in how their Super is managed. In short, all the money becomes the property of the fund member and the funds are portable across industries and jobs.
But we do need to improve the existing system
While the union movement, through negotiation with the then Hawke Labor Government, has achieved the 9% compulsory level, the current level of contribution is not yet high enough to provide a reasonable retirement benefit. The current ACTU policy is for total contribution to increase to 15% over time.
This could be achieved through a combination of options including the taxation system, direct employer contributions and member co-contributions.
Other improvements required to superannuation include:
- The taxation on Superannuation contributions for low and middle income earners should be reduced.
- There needs to be full and transparent disclosure of all fees and charges made by funds so as to allow for accurate comparisons to be made.
- There is a need to introduce regulations to prohibit the charging of commissions on superannuation contributions.
Thanks to the union movement, Australia now has the basis for a relevant and fair retirement income policy. We need to continue to make improvements to ensure that we build properly upon this solid foundation and provide a happy and secure entitlement for all Australians.
Last modified 2004-08-31 05:01 PM
