Australian employees given choice to increase working incomes

It is also considering permitting workers to use their pension savings for expenses pertaining to home ownership.  

Currently, employers contribute 9.5% of their staff’s pay into a pension fund under a superannuation system. The amount is set to increase to 12% between July this year and 2025.   

Under the new system, employees such as public servants and university workers who already received more than the minimum super guarantee rate may be able to opt to take the extra amount as take-home pay. 

Treasurer Josh Frydenberg said although mandatory super was important, “more flexibility” in the system would allow people to better balance their working-life income and their retirement income. 

He said the current system has served well for those who wanted to save more for retirement, but was restrictive for others who wanted to save less to maintain their quality of life today. 

The retirement income review found there were many expenses such as housing, healthcare and education that may be more important for people to spend money on in the immediate term, rather than waiting decades to tap into super savings during retirement. 

In addition, given the positive response to its COVID-19 scheme that allowed people to withdraw up to A$20,000 (US$15,400) from super, the government is considering making the measure permanent for home ownership. 

READ: Australia records 0.6% wage growth for 2020 December quarter

Frydenberg said the scheme has allowed people to stay in their homes, keep their children in school and provide for their families during a challenging period, while still ensuring they have enough income in retirement. 

Labour and the superannuation industry are opposing any pause or failure to proceed with the increase in contributions, according to Financial Review.