Financial Services Minister Stephen Jones to consider ‘pathway’ to super 15pc

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Fifteen percent of the superannuation is part of the official Labor Party platform, with the act binding the party establish a pathway to increase the pension guarantee to 15% once the rate drops to 12% on July 1, 2025.

Economists from the Australian National University, the Grattan Institute and the Reserve Bank of Australia have found that increases in the pension guarantee come at the expense of wage growth.

Payday super on the cards

In a victory for the super sector, Mr Jones revealed he spoke to the Treasury this week about requiring employers to pay superannuation at the same time as they pay wages, telling the Financial analysis he was interested in knowing what the cost of such a move would be.

Employers are only required to pay the superannuation quarterly, which some choose to do to increase their cash flow.

“It seems obvious to us that this would be a pretty effective way to reduce those $4 billion to $6 billion in super defaults a year,” Jones said.

Industry Super Australia says requiring supers and salaries to be paid at the same time will make it easier for employees to track their super and reduce the number of workers missing out after months of unpaid super if their employer goes bankrupt.

Mr Jones said he was open to politics, but stressed that no decision had been made.

“We want to make sure that if we go this route, it will have no budgetary impact. And second, the impact on small and medium-sized businesses around cash flow,” Jones said.

He said his first priority was to follow through on a campaign pledge requiring the tax office to meet yet-to-be-determined recovery targets for super defaulters, which would be made public and reported annually.

Bad bankers could be fined

Another priority for Mr Jones is to pass stalled bills establishing a compensation scheme for victims of financial misconduct and a liability scheme for financial industry executives by the end of 2022.

“I would like to see us at the end of this year with all the Hayne stuff done and dusted off, so we can look forward and not backward on this sorry chapter,” Mr Jones said.

The Morrison government ran out of time to pass the bills in the last Parliament, leading consumer advocates to accuse the Coalition of leaving victims of financial misconduct out of pocket. The Coalition said it was still committed to the bills, despite its failure to pass the laws.

Mr Jones said he was focused on bringing forward a package of bills that could quickly pass Parliament.

He said he was considering including financial penalties in the Labor version of the Financial Accountability Regime, which aims to improve conduct in the financial sector by making managers more accountable.

The Morrison government had considered imposing individual fines of up to $1,050,000 on officers who broke the law in the FAR, but the penalties were removed from the legislation after intense lobbying by banks, such as revealed it on Financial analysis.

Mr Jones said he wanted to adopt a broader version of the last resort compensation scheme than that proposed by the coalition, but was consulting on how best to introduce additional areas such as compensation schemes. investment managed.

The Last Resort Compensation Scheme, which was a recommendation of the Ramsay Review in 2017 and the Hayne Royal Commission in 2019, tries to protect people who cannot seek financial redress when the company that made them wrong has collapsed.

The Australian Financial Complaints Authority suspended processing complaints about insolvent companies in April 2020 as it waited for the compensation scheme to be passed by Parliament.

There were 1,964 complaints worth nearly $365 million in limbo as of February 2022, according to information provided by the AFCA in February to the Senate Standing Committee on the Economy.

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