Australia’s compulsory superannuation system dates back to the introduction of the Superannuation Guarantee by the Keating government in 1992. However, the origins of super can be traced back to the late 19th century.
Superannuation time line
Late 1800 A limited number of private companies provide a form of superannuation for select employees.
Post 1945 Superannuation became more recognised as a desirable employee benefit, but access remains biased towards executive and public sector employees.
1960s and 70s Government inquiries find that high costs, low returns, employee discrimination and restricted benefits are hindering the ability of Australians to save for retirement.
1983 Tax changes are introduced to encourage people to hold benefits in the super system until retirement, when they can access benefits through income streams rather than lump sums.
1985 The Australian Council of Trade Unions (ACTU) seeks a 3 per cent employer superannuation contribution to be paid into an industry fund, as part of its National Wage Case claim with the Conciliation and Arbitration Commission.
1986 The Commission approves the ACTU’s proposal. Super funds approved by the Commission are generally multi-employer industry funds jointly sponsored by trade unions and employer associations. Superannuation coverage at this time stands at around 40 per cent of employees.
1989 In the four years following the 1986 National Wage Case, super coverage increases rapidly to 79 per cent of employees.
1991 Private sector super coverage reaches 68 per cent, up from 32 per cent in 1987.
1992 A new system called the Superannuation Guarantee (SG) is introduced. Employers are required to make tax-deductible superannuation contributions on behalf of their employees. SG commences in 1992/93 with employer contributions of 3 per cent of salary (4 per cent for employers with an annual payroll greater than $1 million).
1995 Super coverage for women reaches 85 per cent, up from 25 per cent in 1983. Super fund assets grow from $40 billion to over $180 billion.
1997 Legislation to give employees a choice of super fund is introduced into parliament. Over 90 per cent of the workforce is covered by super.
1999 A Lost Members Register, maintained by the Australian Taxation Office (ATO) is established to help members locate and consolidate their super funds. Super funds are obliged to report lost members to the ATO on a regular basis.
2002/03 Superannuation employer contributions reach nine per cent of salary, after being phased in over a 10-year period.
2005 Legislation to give employees a choice of super fund comes into effect on 1 July. Employees can now nominate any complying fund for their employer to pay their SG contributions into. (This excludes employees under Australian Workplace Agreements, certified agreements and in defined benefit funds.)
2006/07 Sweeping changes are introduced to super, including:
- Abolition of tax on lump sums and pension payments made to members over age 60
- Abolition of Reasonable Benefit Limits
- New minimum standard rules for pensions and annuities
- Removal of compulsory cashing of superannuation benefits for those over age 65
- Introduction of penalty tax caps on the amount which may be contributed to super
- Extension of co-contribution scheme to the self-employed, and
- Simplification of tax calculations through the introduction of streamlined components.
2009 Concessional contributions are limited to $25,000 per person per year, from 1 July. A transitional cap of $50,000 per year applies for the financial years 2009/10 to 2011/12.
Proposed changes (not yet legislated)
2012 A new government super contribution rebate for low income workers earning less than $37,000 a year is proposed to apply from 1 July onwards.
2013 Proposal for employers to make SG contributions for employees beyond age 70 if they are still employed from 1 July onwards.
2019/20 SG contributions are proposed to reach 12 per cent incrementally by 2019/20 financial year