This productivity commission report looks into the new changes to superannuation funds in award wages.
Australia’s three-pillar retirement income policy comprises a means-tested and government-funded age pension, supported by both voluntary saving and compulsory superannuation contributions. Superannuation effectively became compulsory in 1992 with the introduction of the superannuation guarantee.
This guarantee now requires employers to make superannuation contributions for most employees at the rate of 9 per cent of ordinary time earnings. This rate will progressively increase to 12 per cent by 2019-20. At June 2012, total superannuation assets reached $1.4 trillion, approximately equivalent to Australia’s GDP in 2011-12. Assets are predicted to reach 150 per cent of Australia’s GDP by around 2040. In 2009, the Australian Government commissioned an independent review into the governance, efficiency, structure and operation of Australia’s superannuation system (the Cooper Review).
The Government accepted many of the Cooper Review’s recommendations, including the establishment of a new simple and cost-effective default superannuation product, MySuper. Under new legislation, only defined contribution funds that offer a MySuper product, or exempt public sector superannuation schemes (EPSSSs), will be eligible to be listed as a default fund in modern awards (that is, the 122 industry and occupational awards that commenced on 1 January 2010).