There’s a pretty controversial idea floating around at the moment that would allow low income earners to voluntarily opt-out of compulsory superannuation contributions in favour of a higher take-home pay cheque.
Anyone earning less than $37,000 a year would be eligible for the reroute of their compulsory 9.5% super contribution straight into their bank accounts. A tempting figure to any student working part-time.
And while young workers may initially have more money for beer, they’ll actually be $18,500 worse off on average when it comes time to hang up their boots for retirement.
The Australian Council of Social Services, as well as the Australian Council of Trade Unions have criticised the idea, stating that while it would put extra cash into the pockets of university students, it’s really not in their best interest in the long term.
Come to think of it, if you asked eighteen-year-old me if I wanted extra money in lieu of superannuation, I probably would have jumped at the chance. More money = more party.
But wiser, late twenty’s me knows that’s a horrible idea, because with superannuation, even small contributions can make a big difference over a long period of time.
And it’s not just the loss in money that should turn you off the idea, the exclusion from benefits like income protection and life insurance that come bundled with most funds is also a big deal.
Whether the idea will go any further is yet to be seen, but should it come to fruition, it should be thought about long and hard by potential adopters of the scheme. Superannuation is hella boring when you’re young, but it’s hella important too. Care about it.