A History of the Compulsory Superannuation Guarantee

In 1992, as a response to the anticipated demographic shift towards older populations, the then Keating Labour Government introduced the Compulsory Superannuation Guarantee as part of a major reform package addressing Australia's retirement income policies. It was anticipated that an increase in age pension payments would place an unaffordable strain on the Australian economy. Since its introduction, employers have been required to make compulsory contributions to superannuation on behalf of most of their employees. This contribution was originally set at 3% of the employees' income, and has been incrementally increased by the Australian government. Since 1 July 2002, the minimum contribution has been set at 9% of an employee's ordinary time earnings. Individuals can choose to make extra voluntary contributions to their superannuation and receive tax benefits for doing so. Subsequent governments have made additional changes to superannuation including the capping of personal contributions and limiting salary sacrificing options. No doubt further changes will also be made in the future as governments attempt to encourage people to stay in the workforce longer.



As superannuation is money invested for one's retirement, strict legislative rules prevent early access to preserved benefits except in very limited and restricted circumstances. Initially superannuation was able to be accessed after the age of 55; however, in 1997 the Howard Liberal Government announced changes to the superannuation system to raise the access age so that by 2025, all Australian workers wishing to access their superannuation would be at least 60 years old. These changes were designed to induce Australians to stay in the workforce for a longer period of time, delaying the effect of population ageing. However, the greater the share of retirement schemes that are privately funded, the less the government can influence labour force participation of older people. Access to financial assistance from the Government in the form of the age pension is available from age 65 for males and 64 for females. The Federal Government has also flagged that the Age Pension age is to increase from age 65 to age 67, effective from year 2023.