Posts Tagged “experience matters”
The Government’s decision to delay increases in the superannuation guarantee might be just the first salvo against workers, warns Bill Watson.
Superannuation remains the plaything of politicians.
Superannuation remains the plaything of politicians and there’s no sign that this will change in future.
The latest evidence is the deal between the Federal Government and the Palmer United Party to delay the 12 per cent target for superannuation contributions for seven years to 2025.
• Keating lashes Abbott over super
• Tax axed ‘for the nation’
It reminds Australian workers and retirees that, even three decades after the introduction of occupational superannuation, they have no certainty or security over their retirement savings.
Worryingly, there are more signs that it will become even harder for workers to get their hands on their super.
The recently announced increase of retirement age to 70 for workers born after 1965 gives Australia the world’s highest official retirement age.
It is hard to envisage Canberra, in future, not increasing the age at which workers can access their super. Currently, workers can retire once they’ve reached preservation age, receiving their super tax free in an allocated pension or for most workers a tax free, lump sum.
You can almost hear the Treasurer saying, “we’ve got a mismatch here – the retirement age is 70 but the preservation age for super is 60 – so today to protect the Budget, I’m announcing an increase in preservation age to 70.”
For many workers in physically demanding occupations, being able to work to 70 is just not possible and many unemployed people over 50 know that the jobs just aren’t there.
Increasing the preservation age is just not fair. All it will do, is force workers onto social security until they reach retirement age.
Even more worrying is the kite-flying by the Financial Services Council. The FSC represents banks and the profit superannuation sector and is encouraging a debate about denying workers from taking their lump sums upon retirement and instead forcing them to take a pension.
This debate provides Canberra with an opportunity to force workers to take a pension rather than a lump sum, again with the rationale of protecting the Budget and delivering a win to Australia’s banking sector.
Denying retirees the option of a lump sum and forcing them into pension or annuity products better serves banks than the interests of working people, as banks would be guaranteed an annuity-like income from people’s retirement savings.
Banks – through their distribution networks, conflicted remuneration arrangements and sale of products disguised as financial advice – have been very successful in attracting a disproportionate share of people’s retirement savings.
You have to ask, why should retirees have their income managed by those who have failed to demonstrate that they are able act in their clients’ and customers’ best interests?
There are currently very real tax incentives to encourage people to keep their retirement savings within the system.
Many superannuation fund members did not have the privilege of a university education, or the ability to amass significant retirement savings.
Proposals to force workers to take lump sums is tantamount to income management. It does not consider the implications for retirees – particularly those on lower than average incomes prior to retirement.
What we know is that many of our members don’t have the spare cash to prepare for retirement by paying down debts, repairing their houses and acquiring replacement white goods and cars. Accessing their super on retirement to do these things allows for a comfortable retirement.
The myth that working people waste their super on luxuries such as trips and boats is just that. There is no evidence to support this claim.
If Canberra wants to protect the Budget then meaningful reforms to the retirement system to sustain the tax base would include:
• Eliminating concessional treatment of superannuation contributions for people who have more than seven times the annual non-concessional contribution amount (presently $180,000) in their superannuation
• Taxing earnings on retirement accounts for any earnings on superannuation balances above this seven times amount
What Canberra should not do is force workers to wait until they are 70 to get their super and then only get it in the form of a pension.
Bill Watson is Chief Executive Officer of First Super, which is a shareholder in The New Daily
Published 20 August 2014 12:05, Updated 21 August 2014 07:32
Tamara Erickson says managers should encourage Gen Y workers to innovate.
If you think managing Generation Y workers is tricky, just wait until the next generation walks through the door.
Generational expert Tamara Erickson says children aged four to 17 have been heavily influenced by the global financial crisis, the environmental movement, mobile technology and easy access to information on the internet. That is translating into a generation of savers who feel empowered to take action and aren’t very keen to work for big companies.
“They will make very interesting consumers and employees,” Erickson, who was listed as one of the World’s Top 50 Business Thinkers in 2013, says. “We have a generation of kids coming on who would like to be entrepreneurs if they could.”
The United States-based consultant has written three books on the different generations in our workplaces and is working on a fourth book on the next generation of workers, which she calls the “ReGeneration”.
Speaking to The Australian Financial Review before her keynote speech at the Australian Human Resources Institute national convention on Wednesday, she argues that each generation’s attitude to work makes perfect sense given childhood influences – but we rarely cut other generations any slack.
Erickson acknowledges there are plenty of things that influence our preferences at work, from life stage to gender and personality. But she argues our generation has a big impact on our “knee-jerk reaction” to things. “There’s really good evidence that show some of our generational biases follow us throughout our lives.”
Erickson is a follower of Swiss developmental psychologist Jean Piaget who argued that children’s experiences from age 11 to 15 have a lasting impact on the way their perceive and interact with the world. This helps explain the differences between generations, from traditionalists (in their 70s) who created many of our hierarchical organisations to those about to join the workforce.
Keeping Gen Y interested
Older executives tend to think that Gen Y workers don’t want to “pay their dues”, Erickson says. “Frankly, [Gen Y] don’t want to do some grubby job for five years in the hope it pays off.” She argues it is not that the generation is lazy and entitled, but it is influenced by the September 11 terror attacks and the wars that followed, as well as other acts of violence like the Port Arthur massacre. All this taught the generation that random things can happen and it is best to live life to the fullest now.
Managers should accept that is a reasonable way to think and start catering to it and encouraging them to innovate, she says. “One way to make even menial tasks more challenging is to let them [Gen Ys] figure out how to do them,” she says.
Options appeal to Gen X
Erickson urges companies to change traditional career paths to attract and retain Gen Xs. These workers in their 30s and 40s saw climbing divorce rates, corporate collapses and job lossess in their formative years and they are focused on being self-reliant, having options and having back-up plans, she says. Offering lateral moves around a company appeals to Gen X as it broadens their skill set and options, she says.
Boomers want cyclical work
With an ageing population, companies need to be able to keep the best of their workers aged in their 50s and 60s, Erickson argues. The key is offering flexible work. Her surveys have revealed that the most popular form of work for this generation is cyclical fulltime work (such as working on a project for a few months a year) rather than the usual part-time option. This gives boomer workers the freedom to travel. This type of work is slowly growing more popular in the US. For example Mitre, a US consultancy, has “reserves at the ready” – former full-time highly trained staff who can be called back in for big projects, Erickson says.
- Australian workers are getting older, but a lot of bosses aren’t on board
- Employers are less ageist but ‘inexplicable’ discrimination against older workers persists
- Bunnings sees benefits of valuing older workers
- What to do when you face ageism in the workplace
- Albanese government pushes through 60,000 permanent visa applications to tackle labour shortages
