Employers have suggested that they would take drastic measures to accommodate any future rise in the rate of superannuation guarantee contributions, including laying off workers and even exiting their business.
The sample poll, conducted on the My Business website over the month to 13 September, posed the question: “What would be your business’s primary response if the rate of superannuation guarantee (SG) contributions does increase to 12 per cent?”
Of the 249 respondents, a slim majority (26.9 per cent) said that they would raise prices to cover the costs, while 9.2 per cent said that other costs would come in the firing line.
However, at a time when wages growth is already low, as noted by the Reserve Bank in its decision to cut interest rates in June and July, 15.7 per cent said they would cut employee wages to accommodate the change.
More drastic options include making employees redundant (17.7 per cent) while a quarter (26.1 per cent) said they would resort to all of these options.
Of greatest concern, however, was the 4.4 per cent who said they would seek to exit their business altogether.
It comes as Industry Super Australia (ISA), the collective body of 15 industry superannuation funds, said that freezing the SG rate at its current 9.5 per cent would lose an average family as much as $240,000 compared with the planned progressive increases to 12 per cent.
“Some federal backbenchers want the government to cut the promised increased in super contributions, breaking a key election promise and denying local families the retirement savings they are entitled to,” ISA said in a statement.
“A 30-year-old woman earning $85,000 a year, who takes time out of the workforce to have children, could lose up to $93,000 from her super nest egg if the super contribution rate doesn’t increase. For a local family, by the time they reach retirement, they could lose $240,000 in retirement savings.”
ISA chief Bernie Dean called on Australians to make their local MP stick to the government’s promised phased increases in the SG rate.
“Cutting the super increase will cost families around the country hundreds of thousands of dollars in retirement savings. Australians will be left struggling to make ends meet in retirement, or will be forced to work until they drop before they can retire,” Mr Dean said.
“If the government breaks its promise on super, everyone loses.”
Under current plans, the rate of employer superannuation contributions will rise to 10 per cent in the 2021–22 financial year, and increase by a further 0.5 of a percentage point in each of the four following financial years, until it reaches the 12 per cent threshold.
Last month, the ATO revealed that it is using the huge inflows of data it is now receiving from various sources to chase employers for unpaid SG contributions.
But an employment lawyer in July called for a simplification of the strict rules governing SG, stating that “being one day late can expose an employer to substantial penalties, including a 200 per cent penalty of the usual SG shortfall payable”.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.