Government’s independent review to examine compulsory super
In September, the Federal Government announced its intention to commission an independent review of the ‘retirement income system’. The Government says the review, which will look at the three pillars of the existing retirement income system, being the Age Pension, compulsory superannuation and voluntary savings, “will cover the current state of the system and how it will perform in the future as Australians live longer and the population ages”.
The review will be conducted by a three-person panel made up of: Mr Michael Callaghan AM PSM (Chair), a former Executive Director of the International Monetary Fund and a former senior Treasury official; Ms Carolyn Kay, who has more than 30 years’ experience in the finance sector across roles both in Australia and overseas, including as a member of the Future Fund Board of Guardians; and, Dr Deborah Ralston, Professorial Fellow in Banking and Finance at Monash University, a member of the RBA’s Payments System Board and, most recently, chair of the Alliance for a Fairer Retirement.
Dr Ralston’s appointment to the panel has already been challenged by Industry Super Australia’s (ISA) Chair (and former ACTU leader), Greg Combet, with ISA taking issue with a letter Dr Ralston penned in July in her role as chair of the Alliance for a Fairer Retirement. The letter, addressed to Treasurer Josh Frydenberg, opposed Labor’s proposed changes to franking credits and suggested that the retirement income inquiry consider allowing lower-income earners to receive super in wages on the basis that increasing super to 12% would force them to forgo too much money.
The panel is scheduled to release a consultation paper in November, with a final report to be provided to the Government by June 2020. The scheduled incremental increase in compulsory superannuation contributions from 9.5% to 12%, due between 2021 and 2025 may be reconsidered as a result of the review.
At present, programmed increases to the compulsory superannuation rate stand as follows:
| Applicable income year | Current % |
| 2019-20 | 9.5 |
| 2020-21 | 9.5 |
| 2021-22 | 10 |
| 2022-23 | 10.5 |
| 2023-24 | 11 |
| 2024-25 | 11.5 |
| From 1 July 2025 | 12 |