Will you be withdrawing your superannuation savings early? How do you feel about this prospect? Does it challenge, scare, or fill you with you with a sense of opportunity?
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By April 2021, more than 617,000 Australians had applied for early release of superannuation - a 78 per cent increase as a result of the early release scheme.
The argument from the federal government is that Australians should be able to make their own choices and withdraw up to $20,000 tax free to assist with financial challenges due to the COVID-19 pandemic.
Further, existing rules permit early release of savings including access to the first home superannuation scheme.
But it is not quite that simple.
Superannuation, colloquially known as super, has provided a level of comfort for most employees since the mid-80s.
Superannuation is money set aside for transition to retirement. Essentially, it is our savings earned after working for a substantial period of our lives. In return, employers receive productivity gains for our hard work, increasing their share of the profits.
The first time I heard of super was in the late 80s when my father left the factory floor to join the "staff" of a local factory.
At that time, superannuation was used as recognition for the additional responsibility and to compensate for promoted employees no longer having access to overtime including penalty rates.
We were better off with increased wages and flexibility. However, it was a difficult concept to grasp with the benefit not appreciated until years later.
Nonetheless, the savings accumulated made a significant contribution to our quality of life and continue to do so.
Super is complex, but important and most would agree essential to support the life of which we have become accustomed.
Superannuation funds invest the savings on our behalf, growing the pool in good times whilst suffering any downtown in the market when economic times are not so good.
It was the Australian Council of Trade Unions working with the federal Labor government who delivered the super reforms with the legacy of their decision making continuing to support workers and their families for generations.
Initially, superannuation was also employed to compensate for wage growth with the Hawke government reaching an agreement with the ACTU known as the "accord".
Former federal Treasurer and Prime Minister Paul Keating is known as the "father of super".
He appears regularly on national television programs such as the ABC's 7.30, espousing the benefits of the reforms introduced more than 30 years ago.
Like when he was a member of Parliament, not everyone agrees with Mr Keating and his views, which, at times, tend to divide.
With a witty quip still an important weapon of his argument, Mr Keating can explain complex theories of superannuation in a way that is digestible for many Australians.
By 1988, 51.3 per cent of employees would be covered by a 3 per cent super contribution from employers and by 1990, it rose to 64 per cent.
In 1991, a compulsory superannuation contribution was introduced under the guarantee scheme and 80 per cent of employees were covered.
Fast forward to 2020 and employees choose their own super fund. Additionally, there are now more than one million Australians who manage their own superannuation contributions.
Between 1991 and 2020, the contribution rate rose from three per cent to 9.5 per cent by 2014 with a legislated change to 10 per cent due on 1 July, 2021.
As a result, by June 2020, there was almost $3 trillion of super assets in held in Australia including $731 billion in MySuper as at the June quarter, 2020.
Generalising, the harsh reality is that we are spenders rather than saves. Compulsory and preserved superannuation is the mechanism that controls our thirst for the must-haves.
And while there have been significant productivity gains during the last 10 years, there has not been substantial real wage growth, which was the rationale for the "accord" during the mid-80s.
A debate in our community continues to rage concerning early release of superannuation savings and the legislated raise of compulsory super from 9.5 to 10 per cent.
As former PM Keating explained, for employers the increase will equate to two cups of coffee for a worker on about $70,000.
Meanwhile, employer groups counter with "it will break the bank" due to the impact the COVID-19 pandemic has had on our economy, with stifled conditions unrivalled since the end of World War II.
The truth of the matter in Tasmania is that, with JobKeeper providing an insurance package of sorts, retail spending has not declined according to Commsec's State of the States.
In fact, Tasmania remains atop the charts with retail spending increasing 11.4 per cent versus the decade average and housing finance also up a staggering 75 per cent again versus the decade average.
Consequently, if you have not ordered a new bike or guitar or booked a tradie by now, your Christmas shopping and jobs around the house are going to be challenging at best.
Superannuation is preserved for retirement and I hope it stays that way.
- Brian Wightman is a former Tasmanian Attorney-General and school principal.
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