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Early access to superannuation is wrong

John Hewison
Founder and Director
29 Feb 2016

The Federal Government is being urged by some industry groups to consider allowing low-income earners to opt out of compulsory superannuation, to assist the funding of home ownership. 

As a financial adviser, and in my opinion, this is simply wrong and inappropriate. Compulsory superannuation is an obligation of the employer, not the employee. It is not a deduction from salary and therefore it should not be possible for any employee to “opt in” or “opt out.”

The Super Guarantee charge (SG) was introduced by the Keating Government in 1992. It became an obligation for all employers to make superannuation contributions on behalf of all employees, in addition to salary entitlements. The SG was never a deduction from employee salary benefits. Instead, it was introduced as a retirement benefit and a measure to relieve the pressure of future government social welfare, in view of an ageing population. 

For industry groups and politicians to suggest that the SG should be optional for employees on the basis of accessing additional salary benefits goes against what super stands for. Further, lower income earners are often more in need of financial support in retirement, therefore should have compulsory superannuation contributions paid to them throughout their working lives. 

One could well argue that employees should be required to take more responsibility for funding their retirement through making additional superannuation contributions from salary, rather than depending solely on their employer or the Federal Government through a part or full Aged Pension.
Australia currently has one of the most successful and effective retirement funding systems in the world, and last year’s Intergenerational Report, and the recent World Economic Forum’s Future of Jobs Report show that self-funding for retirement will be essential in the future. We don’t want to end up like Greece, which has a national pension system that it does not have sufficient financial resources to support.

Politicians and industry groups should stop regarding superannuation savings as a honey pot to be used to cure its budgetary problems. The Federal Government must take a long term view around the importance of helping all Australians fund their own retirement, which will alleviate future pressure on the economy.

The information provided above is general information only and individuals should seek specialised advice from a qualified financial adviser. Please contact Hewison Private Wealth for more information. 


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.