Workforce developments affecting the adequacy of superannuation

Australia's existing occupational superannuation scheme originated from a desire by the ACTU to provide access to a comfortable retirement income across the workforce, that is, to extend the perks of the middle class professional and public sector workers to blue collar workers (Gruen and Grattan, 1993, 125). At the same time it addressed concerns about the low rate of private saving in Australia and the supposed twin deficits problem (Indecs Economics, 1995). All round, a 'win - win' situation was envisaged. However, as the compulsory employer contribution has grown to nine per cent and as the total funds under supermanagement have grown to over $500b (Bateman, 2003), there has been a growing unease at many aspects of the scheme. In this article we highlight the problems of access, coverage and adequacy of the super system arising from Australia's increasingly fragmented employment arrangements. Generating an adequate retirement income is premised on having sufficient earnings in order to make a sufficient contribution to a super fund and having continuity of earnings. These conditions do not apply to large components of the Australian workforce and both are especially pertinent to the position of women and many older workers in the Australian workforce. While super may be an important source of private wealth, it will not be capable of generating an adequate retirement income for those outside of fulltime, ongoing and well paid employment. That means that for many Australians a state funded retirement income remains imperative. It is therefore of some concern that the 'ageing crisis' is being promoted as a reason for not only deferring retirement but for extending employment. There have been several statements from the heads of Treasury and the Reserve Bank on the ageing crisis, emphasising the negative implications of an increasing dependency ratio (population/workforce) and a deteriorating fiscal position associated with the growing demand for state provided retirement incomes and health services (Henry, 2003; Macfarlane, 2003). Federal Treasurer Costello announced that the government intends to extend the working lives of Australians as a way of addressing the crisis (ABC, 2004). This incorrectly assumes that there are adequate jobs available for older Australians. Indeed, there appears to be little recognition of the impact of broken and contingent work patterns on retirement incomes and an absence of recognition of the major problems faced by older workers in maintaining jobs, especially after they have been made redundant.