12% super is not a luxury. For most Australians it gives them a fighting chance of a dignified retirement.
Super has one job: to provide a pay cheque through a retirement that could last almost as long as the career that funded it.
Yet some are arguing the Super Guarantee should be cut. Their case rests on three claims: that a lower rate would still deliver an adequate retirement, higher super comes at the expense of wages, and lower super would not hurt the budget.
The evidence says otherwise.
The claim that 9.5% is adequate leans heavily on the Retirement Income Review. But its modelling did not rely on compulsory contributions alone. It assumed workers also made voluntary contributions of up to 2.3% across their careers, taking their total contributions close to 12%.
The review itself acknowledged that few middle and lower-income earners make voluntary contributions.
It also assumed 40 unbroken years of work. That is the reality for only 24% of women and 39% of men. Caring, illness, unemployment and part-time work all leave holes in retirement savings.
On wages, the Super Guarantee rate has now reached 12%, so the trade-off claim can be tested directly. Wage growth averaged just 2.1% through the seven years the super rate sat frozen at 9.5%. Once increases resumed and the super rate climbed to 12%, wage growth accelerated to 4.1% by 2024. The data doesn’t show what the trade-off critics predict. If it did, the years of super rate freeze should have been the years of outsized wages growth.
Then there is the taxpayer.
The Parliamentary Budget Office found that providing retirees with the same living standard through a higher Age Pension rather than super would leave the budget $102.7 billion worse off by 2032. SMC modelling found that without super, annual pension spending would be $12 billion higher by 2028-29 and another 512,000 Australians would rely on the pension.
Most importantly, compulsory super is working for those who need it most. Over the past 20 years, super coverage among low and middle-wealth retirees has more than doubled. Super incomes for middle-wealth retirees have doubled in real terms, while Age Pension reliance among over-65s has fallen from 71 to 53 per cent.
Our modelling released yesterday shows taxpayers would have to fund an extra $14,000 in lifetime Age Pension payments for every median full-time worker aged 25 who withdrew 3% of super contributions for 3 years if One Nation’s policy was enacted. That bill is almost double the amount One Nation estimates people would withdraw.
The system still needs work. The gender super gap persists, unpaid super remains a scandal, and too many young workers and carers miss out.
But weakening 12% super would make those problems worse, not better.
12% is the minimum that matches the messy reality of working life. Every percentage point compounds across decades. Every dollar helps deliver dignity, independence and choice in retirement.
Australians have spent more than 30 years building a strong retirement system. Politicians should improve it, not pull it apart.
