Superannuation and Retirement Income Policy
General Date: September 2005
Union bargaining in the 1980's laid the basis for the compulsory system of employer superannuation contributions which we have had since 1992.
The establishment of 'Industry Funds' and the effect of these on the whole superannuation industry has been as important for workers retirement incomes as the achievement of the superannuation guarantee.
Now, well over 5 million workers are now are members of the industry funds in a workforce of around 8 million. Billions are accruing in their retirement savings accounts.
The compulsory super system has been the single most important factor mitigating against the widening of wealth inequality over the last 15 years.
This represents a fantastic achievement by the labour movement generally and for HSU members. Our superannuation system is already the envy of unions and workers in other countries, who cannot even imagine how a universal contributory system might be achieved in their societies.
But current levels of compulsory superannuation are insufficient to guarantee reasonable retirement incomes for the majority of working Australians.
9% superannuation over a reasonable expected period of paid work will not deliver a post-retirement income of $30,000 for most workers, although more than 70% of current workforce participants believe they would require at least this amount.
The union movement never meant contributions to stop at 9%. There was a Labor plan for a Government/employee co-contribution, which would have resulted in 15% minimum contributions.
There are a number of issues then that a modern superannuation policy must address including how contributions can be increased and how our super system can ensure it suits the nature of the contemporary labour market.
Accordingly, the HSU is committed to a retirement income system based on:
(a) The retention of a current age pension, including it's level and eligibility;
(b) The development of superannuation to the point where, together with the age pension, it delivers workers a retirement income equating to at least two thirds of their gross pre-retirement income;
(c) there be a preferred timeframe as to the introduction of reaching the proposed 15% contribution through any avenue that the HSU has available.
The HSU is concerned at clear evidence that the 9% SG is insufficient to fund an adequate retirement income for average workers.
The HSU also notes the particularly poor retirement income prospects of workers who have not had access to superannuation for the whole of their working lives, together with women, casuals and part-time workers.
The issue of providing adequate retirement incomes can be addressed in a number of ways. The HSU advocates the following as a minimum:
(a) Increasing minimum contributions to a goal of 15%, which could be achieved through one or more of bargaining, legislation or changes to the taxation of superannuation;
(b) Removing the contribution tax;
(c) Restructuring superannuation taxes to provide greater equity;
(d) Extending the entitlement of SG to all workers, irrespective of age or minimum earnings, possibly through changes to award provisions;
(e) Fully disclosing all fees and charges, together with a ban on entry and exit fees and commissions charged on SG contributions; and
(f) Equal treatment of same sex couples in the allocation of superannuation benefits.
The HSU adopts, as an objective, the achievement of a minimum of 10% contributions over the next three years, achieved through bargaining.
THE HSU completely rejects any proposals which it is claimed will assist in achieving adequacy, but which are aimed at assisting those on the highest incomes and transforming superannuation into a mere tax shelter, such as reducing the surcharge and establishing children's accounts.
The HSU is opposed to any attempt to increase the preservation age to claim superannuation benefits, and pledges to initiate a vigorous campaign of workers and the community if there is a move to do so.
The HSU believes that employer superannuation contributions (SGC payments) should be calculated on all employment income, including; time loss workers compensation payments, lump sum termination payments and other payments for accrued leave. HSU will campaign at the National and State level to achieve such payments.
2. Superannuation Funds
The HSU confirms its longstanding support of industry funds as offering the best combination of good returns, low fees and effective service to Health workers and their families.
The HSU calls for the following measures to ensure that the industry funds are able to operate in a fair environment:
(a) Recognition that awards and certified agreements provide collective choice of fund, and should not be legislatively overridden;
(b) Legislation to prevent commission-driven financial planners from directing employees and employers to the most expensive superannuation products; and
(c) Full disclosure and control of fees and charges.
3. Choice of Superannuation funds
The HSU supports giving members a choice of industry funds, ensuring that workers are protected from funds which seek to exploit them for profit.
HSU acknowledges The Superannuation Legislation Amendment (choice of Superannuation funds) Act 2004 offers a challenge to the interests of HSU members.
Corporate superannuation funds and banks have large resources dedicated to advertising and marketing, they are likely to use their resources both to advertise and pay commission to financial advisors to receive endorsement of their products.
HSU recognises the need to act to ensure members are educated about which funds will offer them the best returns.
The best way for branches to offer protection to HSU members is to:
(a) Ensure that superannuation provisions are inserted into all awards and agreements;
(b) Actively promote industry funds;and
(c) Organise information sessions to make sure workers understand the difference between funds.
4. Educating members
The HSU believes that to effectively campaign to improve and protect members Superannuation and Retirement Incomes there needs be a significant focus on engaging, educating and securing members support for union campaigns to improve superannuation entitlements. Where possible education programs should be incorporated into delegate training, EBA claim development, membership surveys and union information.
HSU recognises that education plays a vital role in ensuring that members make the right decision when choosing funds.
Union officials, though not entitled to offer financial advice can educate members by drawing their attention to:
(a) Factual details of industry fund administration fees, insurance and investment returns;
(b) Features of industry funds such as access investment choice and access to home loans;
(c) Comparative figures for different funds reported by industry surveys;
(d) Members that many funds run by banks and insurance companies charge commissions;
(e) Union facilitated information sessions for members with appropriately trained industry fund representatives.
The HSU will take measures to ensure that members have access to relevant information when choosing funds.
Australian superannuation assets are approximately $500 billion, most of which represents the capital accumulation of employees.
The HSU believes that there needs to be greater recognition that superannuation is a long-term investment, which should not be promoted as a source of short-term returns.
The HSU calls for a debate focussing on the benefits which would be gained for workers with a shift in superannuation investment towards economic and social infrastructure and companies offering real growth over the long-term.
The HSU would welcome the development of opportunities for fund investment in social infrastructure, such as public rental housing, which could address areas of need while ensuring a reasonable return for workers' retirement savings.
The HSU also notes the growing evidence that company performance is assisted by good governance practices, and by adherence to appropriate labour, social and environmental standards.
6. Employer Responsibility
The HSU will ensure that the obligation for employers to report on super contributions remains, this is an issue that Branches may look to Bargain on if necessary.
7. Retirement Income
The HSU is to develop policy in regard to retirement incomes.