A Brief History of
Superannuation
Introduction
While you may not know it,
superannuation has existed in some form for more than a century in
Australia, but for most of that time it was by no means
universal.
Up until 1985 when the Australian Council of Trade Unions (ACTU)
sought a 3% employer superannuation contribution to be paid into an
industry fund as part of its National Wage Case claim with the
Conciliation and Arbitration Commission, access to superannuation
was deeply inequitable.
At that time, only a minority of
workers had superannuation - generally higher earning, white collar
employees, public servants and the Defence Forces. Only 24% of
women and only 40% of men had access to any superannuation. F.1
In recognition of the need to develop
strategies to manage an aging population, the then Labor Government
supported the ACTU's claim, and in February 1986, the Commission
confirmed that Awards could include contributions of up to 3% to
approved superannuation funds (generally multi-employer industry
funds jointly sponsored by trade unions and employer associations).
F.2
Between 1986 and 1990, superannuation
coverage rapidly increased from around 40% of employees to 79% as a
result of the Commission's ruling. Despite the rapid growth
however, a number of problems remained. F.3
There were considerable gaps in
coverage for private sector employees, there was a lack of
compliance with Award superannuation provisions, not all employees
were covered by the Awards and 3% superannuation contributions were
too small to significantly improve the retirement income of many
employees.
The Solution: Superannuation Guarantee
In response to the problems associated
with Award superannuation and in recognition of its importance, on
1 July 1992, the Superannuation Guarantee was introduced.
The Superannuation Guarantee was
designed to be universal and compulsory - effectively extending
coverage to employees who had previously not had access to it,
requiring employers to comply and enabling a consistent increase in
employees' retirement savings in line with the Government's
retirement income policy.
The Superannuation Guarantee commenced
in 1992-1993 with employer contributions of 3% (employers with an
annual payroll greater than $1 million were required to pay 4%).
The level of contributions increased over a ten-year period and
reached the current rate of 9% in 2002-2003. F.4
Universal Superannuation…well, almost
There have been a myriad of changes to
the superannuation system over the years, but the aim of universal
superannuation has always been to give access to all working
Australians irrespective of age, gender, occupation, industry and
work pattern.
Recent figures show that in June 2004,
90% of employees had some form of superannuation savings. F.5
While there remain some categories of
employee who are not eligible to receive superannuation - employees
aged over 18 years and working less than 30 hours per week, those
aged over 70 years of age and those paid less than $450 (before
tax) per job in a calendar month - Australia has come a long way
since 1985 when only 37% of workers could look forward to a more
comfortable retirement. F.6
Further information
A chronology of superannuation and
retirement incomes can be found in the Australian Parliamentary Library
Footnotes
- Australian Council of Trade Unions (2005). [Available: here]
- APRA Insight Issue Two (2007). p. 3
- Ibid.
- Ibid. p. 4.
- Taxation Statistics 2002-03: A summary of taxation,
superannuation and industry benchmark statistics 2002-03 and
2003-04, Australian Taxation Office (2004). [Available: here]
- Ibid. [Available: here]