How workers won the right to superannuation since the 1980s

History

• 1980's 35% of workers had superannuation
• Mainly managers, executives and public sector workers
• Not generally available for blue collar workers, women and part time staff
• Most funds were defined benefit funds - only fully vested at 20 - 25 years
• When leaving employment employees got only contributions less charges
• This disadvantaged members who had short periods of service
• Some industry funds established in the 70's, more in mid 80's

National Wage Case 1986

• Based on negotiations between ACTU and Labor government as part of the Accord
• In 1986 the wage case provided for 3% of the wages claim to be paid into approved super funds
• This led to the creation of more industry funds
• By 1988 51% of workers had super
• 1991 - 71% of workers had super

Superannuation guarantee legislation

• Introduced from 1 July 1992
• Gradual increase of employer contributions to super to 9% by 2002/03
• 1993 - 80% of workers had super
• 1995 - 85% of workers had super

Industry funds - what made these different?

• Accumulation schemes not defined benefit
• Portability
• Low cost administration
• Fully vested - all funds plus interest are the members'
• Employee and employer representation in fund management
• Commitment to ensuring employer contributions are paid
• Cheaper TDP and disability insurance
• Superannuation members home loans

Performance

• Industry funds have mainly outperformed similar corporate or life office products
• Relates to lower fees, innovative investment strategies, changing the whole market industry funds work together on innovative products - economies of scale
• Most major industry funds now have assets over $1 billion
• Industry funds invest a higher percentage in Development Capital in Australia - growing Australia

Choice of fund

• Requirement on employers is that they must offer a choice of super fund to employees
• The choice must include:

  » one Retirement Savings Account (RSA) - Bank product, capital

          guaranteed, low interest, no trustee structure

  » one Public Officer Fund

  » the relevant Industry Fund

  » an in-house fund

• Employees have 28 days to choose
• Enterprise agreements can override this

Threats

• Government policy on competition and choice designed to reduce industry fund power base
• Bank RSA's will result in erosion of retirement income due to lower performance.

Adapted from ACTU