Malcolm Turnbull throws weight behind lifting super rate to 12 per cent

Former Prime Minister Malcolm Turnbull has thrown his support behind lifting the superannuation guarantee to 12 per cent, after a report found it would add $12 billion to the economy and create 10,000 jobs a year.

Independent economics firm ACIL Allen compiled the report, which analysed the real-world impact of raising the minimum amount of super an employer must pay.

Currently the super guarantee rate is 9.5 per cent and is not legislated to rise until 12 per cent until July 1, 2025.

READ MORE: Super increase 'would hurt workers' living standards' review finds

There is no guarantee that legislated super rate rises will be rubber-stamped by the government, and Treasurer Josh Frydenberg has hinted that it may not following the economic fallout of COVID-19.

The report found that keeping superannuation increases as legislated will expand the economy, which will lead to a greater demand for workers.

Mr Turnbull said the example created by this country will be used as a precedent around the world.

"Australia's superannuation system is the envy of the world," Mr Turnbull said.

"The legislated increase to 12 per cent should be maintained, not just to deliver a more secure retirement for millions of Australians, but to build stronger economic growth and higher wages."

READ MORE: More than 225,000 NSW workers 'completely wipe' retirement savings after super scheme

Industry Super Australia Chair Greg Combet disputed beliefs that increasing the super rate guarantee will slow wage growth.

"This report dispels the myth that once money goes into super it disappears into thin air and does not make a contribution to the economy," Mr Combet said.

"We know that's not the case and the pool of patient capital has a positive and lasting impact on employment, wages and economic growth.

"The consequences of cutting super are crystal clear – it leads to permanently slashed wages, jobs lost, and the economy crimped all while adding to the aged pension and leaving Australians far worse off in retirement."

READ MORE: Half a million Aussies empty super as COVID-19 scheme estimate blows out to $42 billion

What is the Super guarantee rate?

The superannuation guarantee – or SG – is the minimum amount of money employers are required by law to pay into an employees super fund out of their wages.

Extremely simply, superannuation is saved money to be used by employees when they retire. It's your money, but you generally cannot access it save for some extraordinary circumstances.

A healthy superannuation account means a higher standard of living post-retirement, and reduces the number of people receiving the aged pension.

Governments can choose to freeze or maintain the guaranteed rate.

READ MORE: Morrison plays down push to freeze super

Australia's Legislated Super Guarantee Percentage

*Data from Australian Tax Office

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