People will choose consumption now versus consumption later.
By people, I mean the majority of Australians, not the strong majority of educated investors that frequent this forum. The majority of Australians don’t save and don’t invest. In fact if it wasn’t for super the vast majority of people wouldn’t have any savings or investments.
Increasing the SGC from 9% to 10%, 11%, 12%, or even 20% is a blunt, easy tool the government can use to reduce the welfare burden down the track. However just because it’s the easiest way doesn’t mean it’s the best or right way.
There are disadvantages to this which have already been mentioned; essentially increasing the SGC increases costs to employers and/or cost to employees if they are forced to take a pay cut. Either way it’s not ideal and will most likely cause inflation and or job losses.
I know the super system inside out and in its current form I would encourage those under the age of 40 not to contribute at all (and invest outside of super wher you have 100% control and access to your capital). Why? Well successive governments keep changing the goal posts, it used to be that you could access your super at age 55, that age has been bumped up to 60 (for those born before 1 July 1964) and K Rudd had suggested it be bumped up to 67, so who knows what age it will be and what restrictions will be imposed by the time the younger generation retires.
The government needs to implement a simple framework that your average Joe can understand and that doesn’t change each year with every budget. Perhaps the whole system should be run by an independent third party like the RBA.
People need to be educated to the benefits of saving and starting young. Perhaps Students in their final year of High school should do a mandatory investment and retirement planning class….
One of the big problems we have in Australia is the mind set that we should buy a house at any cost and then spend the next 20 – 30 years paying off a mortgage at the expense of saving and investing for the future. I’ve seen a lot of 50+ years olds who have a roof over their head and nothing much else.
By people, I mean the majority of Australians, not the strong majority of educated investors that frequent this forum. The majority of Australians don’t save and don’t invest. In fact if it wasn’t for super the vast majority of people wouldn’t have any savings or investments.
Increasing the SGC from 9% to 10%, 11%, 12%, or even 20% is a blunt, easy tool the government can use to reduce the welfare burden down the track. However just because it’s the easiest way doesn’t mean it’s the best or right way.
There are disadvantages to this which have already been mentioned; essentially increasing the SGC increases costs to employers and/or cost to employees if they are forced to take a pay cut. Either way it’s not ideal and will most likely cause inflation and or job losses.
I know the super system inside out and in its current form I would encourage those under the age of 40 not to contribute at all (and invest outside of super wher you have 100% control and access to your capital). Why? Well successive governments keep changing the goal posts, it used to be that you could access your super at age 55, that age has been bumped up to 60 (for those born before 1 July 1964) and K Rudd had suggested it be bumped up to 67, so who knows what age it will be and what restrictions will be imposed by the time the younger generation retires.
The government needs to implement a simple framework that your average Joe can understand and that doesn’t change each year with every budget. Perhaps the whole system should be run by an independent third party like the RBA.
People need to be educated to the benefits of saving and starting young. Perhaps Students in their final year of High school should do a mandatory investment and retirement planning class….
One of the big problems we have in Australia is the mind set that we should buy a house at any cost and then spend the next 20 – 30 years paying off a mortgage at the expense of saving and investing for the future. I’ve seen a lot of 50+ years olds who have a roof over their head and nothing much else.
